Answer:
a) Growth rate of earnings
using the sustainable growth rate formula which is the maximum growth rate that a company can sustain without external financing:
Growth rate = ROE * (1 - retention rate)
= 15% * (1 - 40%)
= 15% * 60%
= 9%
(Retention rate = 2/5 * 100 = 40%)
b) Price of equity using dividend growth model:
P₀ = D₀ (1 + g) / (re – g)
D₀ = the current dividend (whether just paid or just about to be paid) = $3
g = the expected dividend future growth rate = from A above (9%)
re = the cost of equity = 12%
= 3 (1 + 0.09) / (0.12 - 0.09)
= $109
c) Price of equity
P₀ = D₀ (1 + g) / (re – g)
= 4 (1 + 0.09) / (0.12 - 0.09)
= $145.33
Explanation:
At the estimated growth rate of 9%, should DFB increase the dividend payout, the price of equity would amount to $145.33 which is higher than the previous price of $109, so DFB is advised to raise its dividend
Answer:
A) normal; elastic
Explanation:
As we know,
1. Perfectly inelastic = When elasticity is zero
2. Inelastic = When elasticity is below than one
3. Unitary elastic = When elasticity is equal to one
4. Elastic = When elasticity is above than one
5. Perfectly elastic = When elasticity is in infinity
And, the income elasticity of demand would equal to
= (Percentage Change in quantity demanded) ÷ (Percentage Change in income)
= (10%) ÷ (5%)
= 2%
As we see that the income elasticity of demand is more than one which represents the elastic plus in normal good it shows a positive relationship between the income and quantity demanded and the elasticity also comes in positive.
Answer:
-911.51 the debt will decrease if sales increase 12%
Explanation:
sales: 28,400
increase of 12%
new sales: 31,808
<em><u>profirt margin:</u></em>
2,250/28,400 = 0.0792 = 7.92%
income: 31,808 x 7.92% = 2,519.19
retained earnigns grow: (1-payout ratio) = 0.6
2,519.19 x 60% = 1,511.514
Increase in working capital: 5,000 x 12% = 600
Asset requirement - reteined earnigns grow = financial needs
600 - 1,511.51 = -911.51
Operant conditioning is used by Mark .
<h3><u>
Explanation:</u></h3>
The instrumental conditioning is the other name given for operant conditioning. It can be considered as a method of learning in which rewards and punishments are used for modification of certain behaviors. This forms a relativity between certain behavior and the consequences of that behavior.
In the example given, Mark has decided to give rewards in order to make his employees to reach office at time. Monthly rewards are given to those employees who did not take breaks and thus he is using the principle of Operant conditioning .
The lands' end will be considered as the consumer in the given choices because a consumer is someone who purchases or buy materials for their benefits, this is seen above as they purchase merchandise and materials from around the world.
