Sometimes when people are under pressure they forget things that they have memorized. Sometimes its answers for a test and sometimes they forget how to walk, your body will just shut down under pressure.
Just try to relax and think of something else of a few, then move on to the next question, it will come back to you.
If a consumer believes that the price of the good will be higher in the future he is more likely to purchase the good now. If the consumer expects that her income will be higher in the future the consumer may buy the good now. In other words positive expectations about future income may encourage present consumption.
Answer:
The value per share of common stock today is $23.94
Explanation:
To calculate the worth of the stock today, we first need to calculate the value of firm using FCF and then calculate the value of equity by deducting the market value of debt and preferred stock from the value of firm. Then we will divide the value of equity by the number of common stock shares.
Value of firm will be calculated using the discounted cash flows model approach. The value of firm will be,
Value of firm = 780000 * (1+0.1) / (1+0.13) + 780000 * (1+0.1) * (1+0.08) / (1+0.13)^2 + 780000 *(1+0.1)*(1+0.08)*(1+0.07) / (1+0.13)^3 +
[ 780000 *(1+0.1) *( 1+0.08) *(1+0.07) *(1+0.06)) / (0.13 - 0.06)] / (1+0.13)^3
Value of firm = $12,577,754.16
Value of equity = $12,577,754.16 - (2000000 + 1000000) = $9,577,754.159
Value per share = $9,577,754.159 / 400000
Value per share = $23.944 rounded off to $23.94
Answer: c. Ten years, because maintenance costs don't increase.
Explanation:
With the maintenance costs constant at $24,000 a year, the machine is still expected to go 10 years before it's x-ray source is depleted and it has to be scrapped.
This means that the useful life is therefore 10 years because the maintenance cost will not increase but will still keep the machine going for 10 years.
