Answer:
a. 13.33%
b. 10%
c. 8%
d. 5.71%
Explanation:
The computation of nominal rate of return is given below:-
Rate of return = Dividend ÷ Current market price
For the first case
= $8 ÷ $60
= 13.33%
For the second case
= $8 ÷ $80
= 10%
For the third case
= $8 ÷ $100
= 8%
For the fourth case
= $8 ÷ $140
= 5.71%
Note :- To get $8 you need to multiply by $100 by the 8%
We can use the formula for binomial
distribution in calculating for the probability that exactly two customers out
five will default on their payments.
The formula is:
P(r) = nCr*q^(n-r)*p^r
Where:
n = sample size, 5
r = successes, 2
q = failure rate, 96% = 0.96
r = success rate, 4% = 0.04
Substituting on the formula:
P = 5C2*0.96^3*0.04^2
<span>P = 0.0142 or 1.42%</span>
Answer:
$63.01
Explanation:
The share price today is the present value of expected future cash flows which in this case are the expected future dividends and the terminal value of dividends beyond the 3rd year.
Year 1 dividend =$2.2
Year 2 dividend =$3.9
Year 3 dividend =$4.8
Terminal value=Year 3 dividend*(1+constant growth rate)/(required rate of return-constant growth rate)
constant growth rate=2%
the required rate of return=9%
Terminal value=$4.80*(1+2%)/(9%-2%)
Terminal value=$69.94
Present value of a future cash flow=cash flow/(1+required rate of return)^n
n is 1 for year 1 dividend, 2 for year 2 dividend , 3 for year 3 dividend, and terminal value(terminal value is stated in year 3 terms)
stock price=$2.2/(1+9%)^1+$3.9/(1+9%)^2+$4.8/(1+9%)^3+$69.94/(1+9%)^3
stock price=$63.01
Goldsmiths increased money supply by cheating out their competitors, and being the best at what they did.
Answer:
A gain of $16,100
Explanation:
When the amount received from the disposal of an asset is higher than the carrying value of the asset, the company makes a gain on disposal.
The carrying amount of an asset is the difference between the cost of the asset and the accumulated depreciation of the asset.
Carrying amount
= $22,000 - $6,600
= $15,400
Gain/(loss) on sale of asset
= $31,500 - $15,400
= $16,100
