Answer:
$41.69.
Explanation:
P9 = Next dividend / Required rate - Growth rate
P9 = $5 / 8% - 2%
P9 = $5 / 6%
P9 = $5 / 0.06
P9 = $83.33
So, the stock price for 9th year is $83.33
Current stock price = P9 / (1 + Required rate of return)
Current stock price = $83.33 / (1+0.08)^9
Current stock price = $83.33 / (1.08)^9
Current stock price = $83.33 / 1.9990046271
Current stock price = 41.68574643115692
Current stock price = $41.69
Therefore, the current stock price is $41.69.
Options:
A. $18,500,000
B. $19,000,000
C. $19,500,000
D. $20,000,000
E. $20,500,000
Answer: C. $19,500,000.
Explanation:MVA(MARKET VALUE ADDED) is a measurement that is used to describe the difference between the market value to a company and the capital contributed by both the shareholders and the bondholders.
WHEN THE MARKET VALUE ADDED IS HIGH IT SIGNIFIES THAT THE COMPANY IS GENERATING ENOUGH MONEY TO COVER THE COST OF CAPITAL.
MVA= (market value-stockholders contribution).
Market value =$39.5*1000000shares
= $39,500,000
MVA= $39,500,000-$20,000000
MVA=$19,500,000.
Answer:
Correct option is (d)
Explanation:
Utility patent is granted to protect an innovation from being copied by others. Utility patent is granted to protect the functionality or usage of the product while design patent is granted to protect the way the product looks like its appearance or ornamentation.
Utility patent is granted for 20 years from the date the application is file with the US trade office while design patent is granted for 14 years from the date of invention.
Here, McDonald's invention is granted utility patent that protects the product for 20 years from the date application is filed with the US patent office.
This is what i found Answer 1
Risk-Adjusted Asset Base
The calculation of the risk-adjusted asset base for a bank is as below-
Risk-adjusted asset = (Cash × 0%) + (municipal security × 20%) + (home mortgages × 50%) + (Commercial loans × 100%)
= (20 × 0%) + (100 × 20%) + (500 × 50%) + (300$ × 100%)
= 0 + 20 + 250 + 300
= $570 million
The outcome shows that the risk-adjusted or weighted asset based for the bank will be $570 million.
Tier1 and Tier 2 Capital:
If the bank has no off-balance sheet activity then minimum required level of Tier 1 and Tier 2 capital will be-
Tier 1 capital = Risk-weighted asset × 4%
= $570 × 4%
= $22.8 million
Tier 2 capital = Maximum of 1.25% of risk-weighted asset
= $570 × 1.25%
= $7.125 million
Total capital = $22.8 + $7.125 => $29.925 million
The outcomes indicate that the minimum required level of Tier1 and Tier
2 capital is $22.8 million and $7.125 million for the bank.
Bank Comply with Capital Requirements:
If the bank has Tier 1 capital of $25 million and Tier 2 capital of $15
million then it will comply with its capital requirements of $29.925
million. It is because in this situation, total capital of bank is $37
million that is higher than the above calculated capital of $29.925
million.
Impact of off-Balance Sheet Activities on Capital Requirements
The addition of off-balance sheet activities might increase the capital
requirement of the bank. It is because an off-balance sheet items is a
financial contract that can create credit loss for the company due to
credit risk. So, in case of adding off-balance sheet activities, a bank
will require more capital to cover credit loss. Along with this, it can
also increase the minimum ratio of capital to risk-weighted assets from
8% and in that situation; the bank will need more capital (Carmichael
& Graham, 2012).
Answer 2
Probability of Repayment and Risk Premium
A).
If the rate on a one-year treasury bill is 6% and in case of loan
default, no payments are expected on financial securities then the
probability of repayment and the risk premium on 1 year AA-rated loan
yielding 9 percent will be-
Probability of Repayment:
The following formula can be useful to determine probability of repayment.
P = (1 + I) / (1 + k)
Where,
I = 6%
k = 9%
Then, ...you have $2.19 left :D
<span>The most probable thing that will happen if the pie maker keeps making additional pies is this: the marginal costs will continue to rise, increasing the total cost, while the marginal revenue remains the same, decreasing the profit. This is to assume that no buyer is interested in purchasing the pies at a certain period of time. </span>