Answer:
<em>$41.69</em>
Explanation:
Assuming the shares is on point and is not overrated or underrated we can <em>solve for dividends</em>
dividends/(r-g) = 35.50
dividends = 1.2425
Now we apply the growth for 3 years
Then we apply the dividend growth model
1.4589949084375/(0.09-0.055) = 41.68556881 = 41.69
Answer:
Effect on income= $115,000 decrease
Explanation:
Giving the following information:
Fixed costs= $45,000
Number of units= 20,000
Unitary contribution margin= $8
<u>To calculate the effect on income, we need to use the following formula:</u>
Effect on income= decrease in fixed costs - decrease in contribution margin
Effect on income= 45,000 - 20,000*8
Effect on income= $115,000 decrease
Answer:
a. If two similar properties are for sale, a buyer will purchase the cheaper of the two.
Explanation:
The principle of substitution justifies the idea that the maximum value of a property will be set by the selling price of an equally valuable and desirable substitute property. In this case of property sale, if an area has two similar houses and one is being sold for $912,000 and the other is priced at $105,000, buyers will most likely go for the cheaper one. There is no reason to pay more money if they will be getting a similar property at low cost.
Answer:
1. positive externalities
2. educational credit for the market failure
3. redistribution
4. failure to maximize the family utility
Explanation:
There are generally four rationales or logical thinking for the public provisions for education. They are the positive externalities, failure to maximize the family utility, educational credit for the market failure, redistribution.
Now each rationales provides reasons that educations is more likely to be underprovided without any intervention from the government. But many of them does not provide any reasons for the mandate of education.
Like suppose the government can support and solve any educational credit market failure by just offering some loan guarantees for the students while letting them chose to receive education or not.
Similarly government can also address positive externalities that are associated with productivity gains or just letting a person educated without any mandating it.
And finally, government redistributes the poor families through the progressive taxation or the offerings of free education without any mandating them.
Answer:
The cost of equity for ABC is 11.74 percent and for XYZ it is 14.47 percent.
Explanation:
a. For ABC
ABC cost of equity = Earning before interest and tax (EBIT) / Equity = $62,222 / $530,000 = 0.1174, or 11.74%
b. For XYZ
Perpetual debt = $530,000 - $310,000 = $220,000
Interest on debt = $220,000 * 7.9% = $17,380
Earning after interest = $62,222 - $17,380 = $44,842
XYZ cost of equity = $44,842 / $310,000 = 0.1447, or 14.47%
