Answer:
Price, Reinvestment
Explanation:
The short term investments earns from the favorable increases in the securities whereas the long term investments earns from the favorable increase in the stock price and the dividends earned for the year. So the risk for short term investment would be price risk which is that the price would not be favorable at the time when the firm will sell the securities whereas long term holders will bear more reinvestment risk which is that the firm will not find an equal opportunity if the project stops which will adversely affect the long term investors.
Answer: $3.4 million
Explanation:
The increase in Retained earnings is the net earnings for the year.
Net earnings are calculated by deducting dividends from the Net income.
Net earnings = Net income - Dividends
1,700,000 = 5,100,000 - Dividends
Dividends = 5,100,000 - 1,700,000
= $3,400,000
= $3.4 million
Answer:
B. inspire a large number of people to help achieve organizational purposes.
Explanation:
Business strategy sets the overall direction for the business; it focuses on defining how a business would achieve its goals, objectives, and mission; as well as the funds and material resources required to implement or execute the business plan.
The recommended approach for strategy formulation by a leader is for him or her to inspire a large number of people to help achieve organizational purposes.
Answer:
a.
Investment X.
Investment X offers to pay $4,500 per year for 9 years.
Discount rate of 7%
This is therefore an annuity as it is a constant figure.
Present value = 4,500 * Present value Interest factor for 9 years, 7%
= 4,500 * 6.5152
= $29,318.40
Investment Y
Present Value = 6,200 * Present value Interest factor for 5 years, 7%
= 6,200 * 4.1002
= $25,421.24
b. Investment X
Discount rate is 21%.
Use Present Value of Annuity formula as attached table does not have factor for 21%.
= $17,574.45
Investment Y
= $18,141.10