Answer:
a.
15%
b.
29.57
Explanation:
The price of a stock whose dividends are expected to grow at a constant rate forever can be calculated using the constant growth model of the dividend discount model approach. The DDM values the stock based on the preset value of the expected future dividends from the stock. The price of the stock today under this model is,
P0 = D1 / r - g
Where
P0 = Price of stock
D1 = Future Dividend
r = Expected rate of return
g = Growth rate
a.
As we have the price of the price of the stock, we need to calculate the expected rate of return by extracting the formula.
r = (D1 / P0) + g
As per given data
P0 = Price of stock = $34
D1 = Future Dividend = $3.40
g = Growth rate = 5% = 0.05
Placing Values in the formula
r = ( $3.4 / 34 ) + 0.05
r = 0.15 = 15%
b.
As per given data
D1 = Future Dividend = $3.40
g = Growth rate = 5% = 0.05
r = Expected rate of return = 16.5%
Placing Values in the formula
P0 = D1 / r - g
P0 = $3.40 / (16.5% - 5%)
P0 = $29.57
Answer:
Mrs. Simpson should buy less bread and more milk.
Explanation:
Besides the nutritional differences between bread and milk, Mrs. Simpson is not buying the utility-maximizing combination of bread and milk.
When she purchases bread, she is paying $1 for 80 utils, that means that the marginal cost of every util is 1.25¢.
When she purchases milk, she is paying $0.80 for 70 utils, that means that the marginal cost of every util is 1.14¢.
So the marginal cost per additional util is lower for milk.
Answer:
CORRECT: It is easier to detect shrinkage in a periodic inventory system than in a perpetual inventory system.
Explanation:
Answer:
the $500,000 that the old production line costed must be treated as a sunk cost. Sunk costs are costs that have already been incurred and the firm cannot recover them no matter what they do. in this case, since ankle-length skirts are out of fashion, the production is useless and is worth $0.
Explanation:
Which bank has the best rating, which bank has the qualifications you want in a bank
