Answer:
The stock A is most valuable as the fair value of Stock A is $100 which is more than the fair value of Stock B ( $83.33) and Stock C ($34.28).
Explanation:
to calculate the fair price of the stocks, we will use the DDM or dividend discount model. The DDM bases the value of a stock on the present value of the expected future dividends from the stock.
Let r be the discount rate which is 10%.
a.
The stock is like a perpetuity as it pays a constant dividend after equal intervals of time and for an indefinite period.
The price of this stock can be calculated as,
Price or P0 = Dividend / r
P0 = 10 / 0.1 = $100
b.
The constant growth model of DDM can be used to calculate the price of this stock as its dividends are growing at a constant rate forever.
P0 = D1 / r - g
Where,
- D1 is the dividend for the next period
- r is the cost of equity or discount rate
- g is the growth rate in dividends
P0 = 5 / (0.1 - 0.04)
P0 = $83.33
c.
The price of this stock can be calculated using the present of dividends.
P0 = 5 / (1+0.1) + 5 * (1+0.2) / (1+0.1)^2 + 5 * (1+0.2)^2 / (1+0.1)^3 +
5 * (1+0.2)^3 / (1+0.1)^4 + 5 * (1+0.2)^4 / (1+0.1)^5 + 5 * (1+0.2)^5 / (1+0.1)^6
P0 = $34.28
Answer:
$42
Explanation:
Data provided as per the requirement of contribution margin per hour of machine time is here below:-
Unit Contribution Margin = $21
Machine Time required by fancy lamp = 0.50 hours
The computation of contribution margin per hour of machine time is shown below:-
Contribution Margin Per Hour of machine time = Unit Contribution Margin ÷ Machine Time required by fancy lamp
= $21 ÷ 0.50 hours
= $42
Therefore for computing the contribution margin per hour of machine time we simply divide the unit contribution margin by machine time required by fancy lamb.
Answer:
Death of a member does not cause the LLC to dissolve unless the rest of the members want to continue. It is not a characteristic of a limited liability company.
Explanation:
An LLC or limited liability company is a kind of hybrid corporate structure which combines the characteristics of a corporation and sole proprietorship or partnership. The company has a separate legal existence apart from its members. The members have a limited liability. There is flexibility in taxation. All the members are allowed to participate in management, there is no board of directors for management.
Answer: C. . increase the quantity supplied of X and decrease the quantity demanded of X.
Explanation:
If the demand and supply curves for product X are stable, a goverment mandated increase in the price of X will result into the increase the quantity supplied of X and decrease the quantity demanded of X.
This is because when there is a rise in price, the suppliers will be willing to supply more while the consumers will demand less of the product.
It is number D because if there’s an increase in supply but not change in demand then the equilibrium price will rise and the quantity will increase
