Rayya Co. purchases a machine for $176,400 on January 1, 2019. Straight-line depreciation is taken each year for four years assu
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Answer:
Ans. The current price of the stock is $135.13
Explanation:
Hi, first, we need to find the price of the stock in year 9, since in year 10 is when the company starts to pay dividends. I know it could sound weird, but due the nature of the following formula, all future cash flows are brought 1 period before the first payment, in our case, if the first dividend is going to be paid in year 10, all the future cash flows of the share (future dividends) are going to be brought to year 9. The formula as follows.
Things should look like this
So the present Value (in year 9) is $228.31, but we need it in the present, therefore, we have to use another formula to bring this value to present value, given the required rate of return.
Where:
Return: The required rate of return (discount rate)
n: number of years from zero.
Everything shold look like this.
So the current price of this stock is $135.13.
Best of luck.
Answer: The price level falls and output rises.
Explanation:
According to Moore's law, it is stated that the computing speed of a microchip doubles every 18 months. According to Moore, this will increase thespeed and capability of computers and also bring about lesser pay for the computers.
The effect of this on the economy is that it will lead to a fall in price level and increase in output as there will be faster and cheaper production. This can be shown in the diagram attached.
