Answer:
The answer is option (c)$89,301
Explanation:
Solution
Given that:
Inflation rate = 2%
The expected value of an investment = 82,500
Now,
nominal terminal value of the investment at the end of year 4.
Thus,
The nominal terminal value rate at the end of year four is given as follows:
= 82, 500 * (1 +2%) ^4
=$89300. 65
= $89,301
Answer:
D. rise
Explanation:
D. As per the study, marginal product theory suggests that, as the marginal product of capital (MPK) increases even if the capital stock is fixed or unchanged, the real rental will also be changed the same way i.e. it will rise in this given scenario.
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Answer:
Option (D) is correct.
Explanation:
Given that,
Dividend, D0 = $0.90
Price, P0 = $27.50
Growth rate, g = 7.00% (constant)
D1 = D0 (1 + g)
= $0.90 × (1 + 0.07)
= $0.90 × 1.07
= $0.963
Cost of equity, Ke = [ D1 ÷ P0 ] + g
= [$0.963 ÷ $27.50 ] + 0.07
= 0.0350 + 0.07
= 0.1050 i.e 10.50 %
Answer:
b. Place the company on a restricted list and give only factual information about the company.
Explanation:
There is an ethical problem in the scenario that borders on professional code of conducts in the area of objectivity and independence.
It was stated in the scenario that ''the head of the investment banking department has asked the head of the brokerage unit <u>to change the recommendation from "sell" to "buy."</u>
This is a case of wanting to interfere with the <u>objectivity</u> of the recommendations which should be based on <u>facts not bias</u>.
Secondly, the head of investment banking is trying to interfere with the <u>independence</u> of the head of brokerage unit.
According to the Standards, the head of the brokerage unit would be permitted to place the company on a restricted list and <u>give only factual information</u> about the company.
