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Greeley [361]
3 years ago
5

A firm’s current profits are $ 400,000. These profits are expected to grow indefinitely at a constant annual rate of 4 percent.

If the firm’s opportunity cost of funds is 6 percent, determine the value of the firm a. The instant before it pays out current profits as dividends.
Business
1 answer:
horrorfan [7]3 years ago
6 0

Answer:

$20,800,000

Explanation:

The formula and computation is shown below:

Value of the firm = {(Firm's current profits) × (1 + firm’s opportunity cost of funds)} ÷ (firm’s opportunity cost of funds - constant growth annual rate)

= {($400,000) × (1 + 0.06) ÷ (0.06 - 0.04)

= $424,000 ÷ 0.02

= $21,200,000

Hence, we recognized all the information which is mentioned in the question.  

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Growth stage. Profits from the company should be able to comfortably cover overhead and pay employees at this point. Sales are probably rising, and profit margins have risen once capital investments and loans have been repaid by the business.

<h3>What these terms means?</h3><h3>A) Positive cash flow</h3><h3>B) Negative cash flow</h3><h3>C) Dividends</h3>
  • The net amount of cash and cash equivalents coming into and going out of a business is referred to as cash flow.
  • Money spent and money received represent inflows and outflows, respectively. Fundamentally, a company's capacity to produce positive cash flows, or more specifically, its capacity to maximize long-term free cash flow, determines its ability to create value for shareholders (FCF).
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8 0
1 year ago
On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor busin
Hunter-Best [27]

Answer and Explanation:

The preparation of the lower portion is presented below:

Income from the continuing operation

before income tax                   $7,800,000

Less: Income tax expenses ($7,800,000 × 25%) (1,950,000)

Income from continuing operation(A) 5,850,000

Discontinued operation:  

Loss from operation discontinued components

($15 - $13 - $4.8) ($2,800,000)

Income tax benefits ($2,800,000 × 25%)  $700,000

Loss on discontinued operation(B) ($21,000,000)

Net loss (A - B) -$15,150,000

7 0
3 years ago
a. government control of the market.b. market forces working through the price mechanism.c. the money supply that serves to keep
Sergeu [11.5K]

Complete Question:

The "invisible hand" using Adam Smith's terminology refers to

a. government control of the market.

b. market forces working through the price mechanism.

c. the money supply that serves to keep the economy working smoothly.

d. the role of innovation in maintaining a steady rate of growth.

e. "behind-the-scenes" policy making to influence how markets allocate scarce resources.

Answer:

The "invisible hand" using Adam Smith's terminology refers to  Market forces working through the price mechanism.

Explanation:

The invisible hand is the in observable market force, which helps demand and delivers goods automatically to balance in a free market.

Description: In his book ' The Wealth of Nations ' Adam Smith implemented the phrase of the invisible hand.

An invisible hand that defines the processes through which favorable social and economic effects that emerge out of the self-interested behaviors obtained by individuals, who have no intention of producing such results. The term developed by the eighteenth-century British philosopher and economist Adam Smith.

5 0
3 years ago
An agreement between the owner of a brand and another company or individual who pays a royalty for the use of the brand in assoc
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Answer:

<u>Licensing.</u>

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Brand licensing occurs when there is an agreement between companies to use a brand and its characteristics such as name, logo and image, upon payment of royalts for the use.

It is a strategy that occurs on a large scale worldwide due to the ease of use and the added benefits of using a consolidated brand in the market, which already has an established public, and added value, which generates an economic strengthening in companies that use this strategy. as well as increased reliability and profitability.

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3 years ago
Help me I dont know.
Margarita [4]

it is bachelors degree

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