Answer:
c. Equals to 1.5
Explanation:
Options are <em>"a. -lower than b. -higher than c. -equal to
"</em>
Expenditure multiplier = Change in real GDP / Change in spending
Expenditure multiplier = 9/6
Expenditure multiplier = 1.5
Thus, the expenditure multiplier is equal to 1.5
<u>Answer:</u> The amounts have to be determined using fair value for plant and equipment and for long term debt.
<u>Explanation:</u>
Fair value method is based on the market price of the asset. The historical value of the assets is not used to consider the sale price of the asset. Fair value is where Company J and Company K both the parties have to accept the price based on the known facts of the assets.
Company J and Company K should both accept the price out of free will and should not be out of compulsion. Company J can report based on the financial statement fair value of the assets and long term debt.
Answer:
Do = $2.00
D1= Do(1+g)1 = $2(1+0.2)1 = $2.40
D2= Do(1+g)2 = $2(1+0.2)2 = $2.88
D3= Do(1+g)3 = $2(1+0.2)3 = $3.456
D4= Do(1+g)4 = $2(1+0.2)4 = $4.1472
D5= Do(1+g)5 = $2(1+0.2)5 = $4.97664
PHASE 1
V1 = D1/1+ke + D2/(1+ke)2 + D3/(1+ke)3 +D4/(1+ke)4 + D5/(1+ke)5
V1 = 2.40/(1+0.15) + 2.88/(1+0.15)2 + 3.456/(1+0.15)3 + 4.1472/(1+0.15)4 + 4.97664/(1+0.15)5
V1 = $2.0870 + $2.1777 + $2.2723 + $2.3712 + $2.4742
V1 = $11.3824
PHASE 2
V2 = DN(1+g)/ (Ke-g )(1+k e)n
V2 = $4.97664(1+0.02)/(0.15-0.02)(1+0.02)5
V2 = $5.0762/0.1435
V2 = $35.3742
Po = V1 + V2
Po = $11.3824 + $35.3742
Po = $46.76
Explanation: This is a typical question on valuation of shares with two growth rate regimes. In the first phase, the value of the share would be obtained by capitalizing the dividend for each year by the cost of equity of the company. The dividend for year 1 to year 5 was obtained by subjecting the current dividend paid(Do) to growth rate. The growth rate In the first regime was 20%.
In the second phase, the value of shares would be calculated by taking cognizance of the second growth rate of 2%. In this phase, the last dividend paid in year 5 would be discounted at the appropriate discount rate after it has been adjusted for growth.
Answer: $428,000
Explanation:
Given that,
Accounts payable = $62,000
Accounts receivable = 100,000
Cash = 30,000
Inventory = 138,000
Land = 160,000
Common Stock = 200,000
Revenue = 80,000
Dividends = 56,000
Expenses = 40,000
Total assets = Accounts receivable + Cash + Inventory + Land
= 100,000 + 30,000 + 138,000 + 160,000
= $428,000
Answer:
$41,400
Explanation:
Tuition will increase by $500 each year
Year 1 tuition = $17,300
Year 2 tuition = $17,800
Year 3 tuition = $18,300
Year 4 tuition = $18,800
Total = $72,200
Scholarship per year = $5000
Total scholarship for 4 years = 4 * $5000
= $20,000
Earnings per year = $2,700
Total earnings for four years = 4 * $2,700
= $10,800
She plans to take out a loan to cover the remaining tuition costs
Loan = Total tuition - (Total scholarship for 4 years + Total earnings for four years)
= $72,200 - ( $20,000 + $10,800)
= 72,200 - (30,800)
= 72,200 - 30,800
= 41,400
Loan = $41,400
Michelle need to borrow $41,400
