The amount of the stock price that will be reflected in the PVGO is $10
The value of an organization's potential future growth is symbolized by the acronym PVGO, or "present value of growth opportunities." It represents the potential value for the organization by reinvesting its earnings back into the business.
Expected Dividend payment (D) = $2.50
Total Earnings (E) = $4
Rate of return (ROR) = 20%
Step 1. Using no growth rate (GR), computing the stock price (SP)
Since the growth rate is not specified, 0% is taken as the default value.
The stock price (SP) = E/ROR
= $4 / 20%
Stock price = $20.
Step 2. Computing the SP reflected in PVGO.
So, total SP with no GR
= $30 - $20
Stock price with no growth rate = $10
Hence, the $10 will be reflected in the PVGO
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Answer: 26.5% increase
Explanation:
Current profit = Sales - Variable costs - fixed costs
= ((32.50 - 16.50) * 360 bears) - 1,420
= $4,340
Sales increase by 20% = 360 * ( 1 + 20%) = 432 bears
New profit;
= ((32.50 - 16.50) * 432 bears) - 1,420
= $5,492
Effect of sales increase = ( 5,492 - 4,340) / 4,340
= 26.5% increase
At a price of $10, the marginal revenue of a monopolist is $6. if the marginal cost of production is $8, the monopolist should keep the price at same level in order to maximize profits.
For increasing the profits the monopolist should increase the marginal revenue to $8 so that the mr =mc.
Every firm follows the rule of profit maximization. In this rule marginal cost is equal to the marginal revenue and the MR intersects the MC curve the profit will be the maximum at this level.
The marginal cost of production and marginal revenue are the economic measures which are used to determine the amount of output and the price per unit of a product that will maximize profits.
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Answer:
32.59 days
Explanation:
DSO = Average receivables / Sales Revenue X 365
= $56,736 / (2,473,701 - 1,838,207) x 365
= $56,736 / (635,494) x 365
= 32.59 days
