Answer:
when valuing companies with temporarily high growth rates.
Explanation:
Discounted dividend models are methods to assess a company's share price based on the dividends that company will distribute in the future. Also known by its name in English dividend discount model (DDM).
These models are based on the theory that the price of a share must be equal to the price of the dividends that the company will deliver, discounted at its net present value.
If the price of the share in the market is lower than the result obtained by the discounted dividend model, the share is undervalued and therefore it is advisable to buy. If, on the contrary, the market price is higher than the model, it is understood that the share price is too high.
Multistage dividend growth models
It is very difficult for a company to experience the same growth every year as the Gordon model assumes, so multistage models assume different growths for each period.
The most common is to use two or three stage growths, where at first the growths are higher but then tend to stabilize at a smaller constant growth. As for example in early stage companies.
Answer and Explanation:
The journal entry is shown below
Cash $46,620
To Notes Receivable $44,400
To Interest receivable ($44,400 × 15% × 120 days ÷ 360 days)
(Being the cash received is recorded)
Here we debited the cash as it increased the assets and at the same time we credited the interest receivable and the note receivable as it decreased the assets
The same is to be considered
Question: The demand function for widgets is given by D(P) = 16 − 2P. Compute the change inconsumer surplus when price of a widget increases for $1 to $3. Illustrate your result graphically
Answer:
For price of a widget equal to $1 consumer surplus is
D(1) = 16 - 2(1) = 14
CS₁ = ½ × (8 – 1) × D(1) = ½ × 7 × 14 = 49.
When price is equal to $3 consumer surplus is
D(3) = 16 - 2(3) = 10
CS₃ = ½ × (8 – 3) × D(3) = ½ × 5 × 10 = 25
Answer:
Balance = $1,650
Explanation:
As Norma company has paid 4 months rent in advance, therefore at the end of June, norma company will record its 1-month expense as follows
Adjusting entry at the end of June would be
DEBIT CREDIT
Entry
Rent Expense $550
Prepaid Rent $550
The balance on Norma's prepaid expense would be
Prepaid Rent = $2200
Rent Expense = ($550)
Balance = $1,650
Yes if you actually try to become them
