Answer:
The rate of growth of their dividend is 6.30%.
Explanation:
This problem requires us to calculate the growth rate at which the dividend will grow. The market value of share and market rate of return is also given in the problem. So we can easily calculate it using market valuation formula.
MV = D(1+G%)/ke
39.86 = 1.2 (1+G%)/(9.5%-G%)
G = 6.30%
Important dsiclamer: there was a type in the question you enter 26,000 while in the textbook is for 20,000
Answer:
a. Decrease $1,200,000
Explanation:
Income before internal transfer:
revenue 3150
cost 1050
gross 2100
fixed (2100)
operating 0
external engine purchase (3000)
net (3000)
After internal change:
revenue 1050
cost (960)
gross profit 90
fixed (2100)
operating (2010)
internal engine purchase (1,050)
net (3,060)
difference -3060--3000 = 60
20,000 units x 60 = 1,200,000
False. Price ceilings, provided there are no other government policies in place, will cause deadweight loss. Diagram provided.
