Answer:
CAPM = 12.30%
Dividend Growth Model= 10.32%
Explanation:
According to the capital asset price model: Expected rate of return = risk free + beta x (market premium)
5% + (0.73 x 10%) = 12.30%
according to the constant dividend growth model
price = d1 / (r - g)
d1 = next dividend to be paid
r = cost of equity
g = growth rate
$35 = $1.6 x (1.055) / (r - 0.055)
r = 1.688 / 35 + 0.055 = 0.1032 = 10.32%
Answer: $242,567.27
Explanation:
The $5,000 is an annuity as it is being paid every year and is a constant amount.
The value in 19 years is the future value of this annuity:
Future value of annuity = Annuity * ( ( 1 + rate) ^ number of years - 1) / rate
= 5,000 * ( ( 1 + 9.5%)¹⁹ - 1) / 9.5%
= $242,567.27
Answer:
C. the payoffs are dependent upon another variable, such as revenue or profit.
Explanation:
Contingent contracts are one of the types of contracts in which the promisor offers the responsibility only when the distinct conditions are satisfied. It works on the occurrence or non-occurance of the specific event. It relies on the happening of an unpredictable event. The contingent contract becomes void in the case when the happening of the event grows impossible.
Answer:
C. The court will issue a preliminary injunction barring Ralph from playing with any team other than the Jets during the course of the lawsuit.
Explanation:
Signing a contract means that both the offering and the accepting parties are agreeing over the particular protocols. Offer, acceptance, and consideration are the important aspects of the contract. The acceptance of both parties over the same norms is the most essential part of the contract.
In the above situation, Ralph has violated the agreed contract with the Jets. He went forward and signed another contract with Giants. This action of Ralph was a strict violation of the contract agreed on by Ralph and Jets. According to the judicial proceedings, Ralph was ordered to obey the contract and was barred from playing with any other team.
Answer:
D. -$1,116
Explanation:
Total amount of purchase = number of shares * price per share
= 300 * $8.62
= $2,586
Total dividends received = number of shares * dividend per share
= 300* $0.10
= $30
Total proceeds from sale of shares = number of shares sold * price per share
= 300* $4.80
= $1,440
Total dollar return = (Total proceeds from sale of shares + Total dividends received - amount of purchase)
= $1,440 + $30 - $2,586
= -1,116
