Answer:
Price of stock =$ 15.31
Explanation:
<em>According to the dividend valuation model , the current price of a stock is the present value of the expected future dividends discounted at the required rate of return.</em>
<em>So we will discount the steams of dividend using the required rate of 11% as follows</em>:
Year Present Value(PV)
1 $1.65 × 1.11^(-1) = 1.486
2 $1.63× 1.11^(-2) == 1.322
3 $1.65× 1.11^(-3) = 1.2064
<em>Year 4 and beyond</em>
This will be done in two steps
Step 1 :
PV of dividend in year 3 = 1.70/0.11 = 15.45
Step 2
PV of dividend in year 0 =15.45× 1.11^(-3)= 11.30
Price of stock = 1.486+ 1.322 + 1.2064 + 11.30
=$ 15.31
Answer: Cathy should therefore purchase less than 20 units of good X and more than 25 units of good Y to reach the optimal bundle.
Explanation:
By the rational spending rule, the optimal bundle will be at a quantity where the following is satisfied:
MUx/ MUy = Px / Py
Marginal utility of X / Marginal Utility of Y = Price of X / Price of Y
MUx/ MUy = 9 / 19 = 0.47368
Px / Py = 0.5/1 = 0.5
There is a mismatch as Px/Py is greater than MUx/ MUy.
Marginal utility of X would have to increase and Marginal Utility of Y would have to decrease to get to the optimal bundle.
Marginal utility increases when consumption decreases and vice versa.
Cathy should therefore purchase less than 20 units of good X and more than 25 units of good Y to reach the optimal bundle.
Answer: The farmer chooses errands on a rainy day, because a sunny day would be for planting and tending the land. The farmer could go and run errands on a sunny day, but his crops would not be tended for the day.
The business man would choose to work on a rainy day, because his new suit can't get wet. He is choosing to stay inside and protect his new suit, and giving up the opportunity to run errands.
Hope it helps!
Answer:
1,950,000 grams
Explanation:
The computation of the material should be purchased is given below:
Raw materials purchased is
= Ending inventory of raw materials + Materials to be used - Beginning Inventory of raw materials
where,
Raw materials to be used = units produced × 7 grams
Units produced is
= Ending inventory of finished goods + units sold - beginning inventory of finished goods
= 30,000 units + 270,000 units - 20,000 units
= 280,000
Now raw materials used is
= 280,000 × 7 grams
= 1,960,000 grams
Now
Materials purchased = Ending inventory of raw materials + Materials to be used - Beginning Inventory of raw materials
= 40,000 grams + 1,960,000 grams - 50,000 grams
= 1,950,000 grams