Answer:
- Stock is overpriced/ overvalued.
- Sell if you own it.
- Don't buy if you don't.
Explanation:
Use CAPM to find the required return on the stock:
Required return = Risk free rate + beta * ( Market return - risk free rate)
= 2.5% + 1.3 * (7% - 2.5%)
= 8.35%
Price based on Constant Dividend Growth Model (CDGM):
Price = Next dividend / (Required return - growth rate)
Next dividend = 1.40 * ( 1 + 4%)
= $1.456
Price = 1.456 / (8.35% - 4%)
= $33.47
<em>Stock is selling for $35. It is overvalued. Don't buy the stock. Sell if you have the stock. </em>
Answer: Coca-cola
Explanation:
Coca-cola as a soft drink has dominated the world since the 20th century but faces competition against drinks from other companies such as Pepsi and RC Cola.
In other to keep up their competitive edge and sell to more customers, the embark on extensive marketing campaigns that are catchy and memorable.
Coca-cola has also been differentiated over the years by introducing various flavors that are meant to appeal to different segments in the market such as Diet Coke, Coca-Cola Zero Sugar, Coca-Cola Cherry and Coca-Cola Vanilla.
Answer:
b. $311,600
Explanation:
For the computation of total contribution margin first we need to find out the contribution margin per unit which is shown below:-
Contribution Margin per Unit = Contribution Margin ÷ Units Sold
= 319,200 ÷ 8,400
= $38
Total Contribution Margin = Contribution Margin per Unit × Units Sold
= $38 × 8,200
= $311,600
Therefore for computing the total contribution margin we simply applied the above formula.
Answer:
$150,450
Explanation:
With regards to the above, her assets are: checking account, savings account, Home, furniture and appliances, laptop, mutual fund, car and retirement account.
= $750 + $1,900 + $91,000 + $11,000 + $3,300 + $5,500 + $37,000
= $150,450
Therefore, the total value of her asset is $150,450
