. You just inherited a trust that will pay you $100,000 per year in perpetuity. However, the first payment will not occur for ex
1 answer:
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Answer:
Option A.
Explanation:
Given information:
GDP = $11 trillion
Consumption = $7 trillion
Taxes = $2.5 trillion
Surplus = $1 trillion
The formula for private saving is
The formula for national saving is
The private saving and national saving are $1.5 trillion and $2.5 trillion, respectively.
Therefore, the correct option is A.
The second stock will be the best one to hold by the investor
Explanation:
Value of stock = D1 / r – g.
D1 = the annual expected dividend of the next year.
r = rate of return.
g = the expected dividend growth rate (assumed to be constant)
Stock D1
Dividend of D1 = 10, Expect a return of rE= 10% growth rate =5%
Value of stock (1) =10÷(0.1-.05)=200
Stock D2
Dividend of D2 = 100, Expect a return of rE= 10% growth rate =6%
Value of stock (2) =100÷(0.1-.06)=2500
So the stock D2 which pays 100 as dividend and having a growth rate of 6% is best