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lbvjy [14]
3 years ago
5

Teall Development Company hired you as a consultant to help them estimate its cost of capital. You have been provided with the f

ollowing data: D1 = $1.45; P0 = $22.50; and g = 6.50% (constant). Based on the DCF approach, what is the cost of equity from retained earnings?
Business
1 answer:
katrin [286]3 years ago
5 0

Answer:

Cost of Equity 12.9%

Explanation:

Cost of Equity is the rate of return required by the equity holders of the company. It is rate which is associated with the equity of the company. This can be calculated by using Discounted cash flow method of valuation of equity because this rate is used to discount the expected future dividend of related to equity.

Value of Equity = Dividend paid / ( rate of return - growth rate )

P0 = D1 / ( r - g )

$22.5 = $1.45 / ( r - 6.5%)

r - 6.5% = $1.45 / $22.5

r - 0.065 = 0.064

r = 0.064 + 0.065

r = 12.9%

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When the price of hamburgers increased from $1.50 to $2.75, the quantity demanded decreased from 375 units sold to 250 units sol
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Answer:

Inelastic

Explanation:

When the price of hamburgers increased from $1.50 to $2.75, the quantity demanded decreased from 375 units sold to 250 units sold. Using the midpoint method, hamburgers are said to be inelastic

1. Change in price = 2.75-1.5 / (1.5+2.75)/2 = 1.25/2.125 = 0.59

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3. Price Elasticity = 0.4/0.59 = 0.68

4. When the value of elasticity is less than 1, it suggests that the demand is insensitive to price and is inelastic

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A major airline sells an aggressively low priced ticket compared to a new low-fare airline, which is trying to enter the market.
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Answer:

The correct option is is A, predatory pricing

Explanation:

Predatory pricing is an illegal approach to pricing where a firm fixes a very low price in order to send competitors out  of business.

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This approach is against the anti-trust law as it paves for a monopoly market,where only one firm operating in the market determines the price which is not likely to be favorable to consumers

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Which are the first steps you should consider when constructing an online business strategy.
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<h3>What is a business strategy?</h3>

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Read more on business strategy here: brainly.com/question/17130109

#SPJ1

Complete Question:

Which are the first steps you should consider when constructing an online business strategy?

Create goals and identify a USP

Understand the target audience

Change your mission statement to match the goals

Define and segment your audiences

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2 years ago
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