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3 years ago

1. How are people rational when they make choices?

1 answer:

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Rational choice theory states that individuals rely on rational calculations to achieve outcomes that are in line with their personal objectives. These decisions provide people with the greatest benefit or satisfaction — given the choices available — and are also in their highest self-interest.

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Perine, Inc., has balance sheet equity of $5.4 million. At the same time, the income statement shows net income of $783,000. The

S_A_V [24]

Answer:

The target stock price in one year is $149.93

Explanation:

Fly Away, Inc., has

Balance sheet equity of (E) = $ 5,400,000

Also, the income statement shows net income of (NI) = $783,000.

The company paid dividends of (D) = $438,480

Shares of stock outstanding (N) = 100,000

Benchmark PE ratio = 18

Question = what is the target stock price in one year?

We need the expected EPS at the end of next year and not this year.

EPS this year, E₀ = NI / N

= 783,000 / 100,000

= $ 7.83

Retention Ratio, "R" = 1 - Dividend payout ratio = 1 - D/NI

= 1 - 438,480 / 783,000

= 1 - 56.00%

= 44.00%

Return on equity, ROE = NI / E

= 783,000 / 5,400,000

= 14.50%

Growth rate in earnings, g = R x ROE

= 44.00% x 14.50%

= 6.38%

Hence, expected EPS next year, E₁ = E₀ x (1 + g)

= $ 7.83 x (1 + 6.38%)

= $ 8.33

Hence, target price next year, P = Benchmark PE ratio x E₁

= 18 x $8.33

= $149.93

The target stock price in one year = $149.93

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4 years ago

The difference between variable costs and fixed costs is (CMA adapted) A. Unit variable costs fluctuate and unit fixed costs rem

Hatshy [7]

Answer:

(A) Unit variable costs fluctuate and unit fixed costs remain constant.

Explanation:

The fixed costs are the costs which have to be incurred always, irrespective of what the output produced is by the firm. For instance, a firm always has to charge depreciation on its fixed assets, pay salary to the premises staff and pay fixed salary to the managers for managing etc, irrespective of whatever output it produces.

Variable costs are the costs which vary with the level of output produced activity. For example, if more output is produced more will be the raw material payments, more will be the manufacturing related other expenses and more will be the wages paid to the labour etc and vice-versa.

Hence, thereby the per unit variable costs fluctuate and unit fixed costs remain constant.

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3 years ago

The two major markets in the circular flow of income and expenditure are the:________

Arada [10]

Answer:

[2] goods market and factor market.

Explanation:

The circular flow of income shows how exchange of money, goods and services occur in an economy.

the two flow circular income model consists of an household and a firm.

The household buys factors of production from the household in exchange for money (firms buys from the factor market). In return, households receive payment.

households then go to the goods market to purchase goods and services.

3 0

3 years ago

Look at pic for question and answers.

zubka84 [21]

Answer:

It is decreased by the sale amount

Explanation:

An income statement is a financial statement that communicates a business's profitability. An income statement lists the revenues and expenses incurred by a business in a period.

The sale of a company's asset may result in a loss or profit. A profit is treated as an income to the business, but a loss is an expense. When an asset is sold at a loss, business expenses increase. An increase in expenses reduces profits as reported in the income statement.

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3 years ago

Prom Night Formal Wear has the following stockholders' equity accounts at December 31, 2018: Common Stock, $1 par value, 1,900,0

aalyn [17]

Answer:

Prom Night Formal Wear

Balance sheet

Stockholders' equity section

December 31, 2018

PARTICULAR AMOUNT

Stockholders equity

Common stock $1,900,000

Additional Paid-in capital $23,000,000

Total Paid-Up Capital $24,900,000

Retained earning $16,000,000

Treasury stock ($1,850,000)

Total Stockholder equity $39,050,000

8 0

3 years ago