$4 million.
An item is worth what the market is willing to pay for it, which is sometimes different than the estimated value.
Answer:
a. Current Stock Price is $ 30.67
b. Current Stock price using forecasted real dividend and a real discount rate is $ 69.00
Explanation:
a. The question belongs to dividend discount model. It is used to calculate intrinsic price of the stock. This model assumes that price of stock or share is equal to net present value of its future dividends.
Price of Stock = (Current year Dividend x ( 1+ growth rate)) / (nominal cost of capital - growth rate)
Current year Dividend = $ 2
Nominal Cost of Capital = 10.25 % or .1025
Growth rate = 3.50 % or 0.0350
Price of Stock = ( $2 x (1 + 0.035) / (.1025 - .035))
Price of Stock = $ 2.07 / ( .1025 - 0.0350) = $ 30.67
b. Price of Stock = Current year Dividend + (Dividend x( 1+ growth rate)) / (real cost of capital - growth rate)
Real Cost of Capital = [ (1 + nominal cost of Capital) / ( 1 + inflation rate)-1 ]
Inflation rate = 3.50 % or .0350
Real Cost of Capital = [ ( 1 + .1025) / ( 1 + .0350) - 1 ] = 0.0652 or 6.50 %
Price of Stock =(Dividend x ( 1 + growth rate)) / ( Real cost of Capital - Inflation rate)
Price of Stock = ($ 2 x ( 1 + 0.0350)) / (0.0650 - 0.0350)
Price of Stock = $ 69
Answer:
c) a firm does not have sufficient time to change the level of use some of its inputs.
Explanation:
The definition of short-run in economics is not a term to be used for a specific certain period of time but it means that the period of time is too short that the firms cannot change the level they are using of some of their inputs or costs. It means they do have fixed costs they cannot change. For example, all machinery installed, a yearly rent paid, electricity or others that the firm cannot change unless there is sufficient time. In a short period of time, it will have those costs anyway. The firm cannot change the level of that input. And it is short run of at least one input. It may be many. But it is not necessary to have all inputs unchanged to consider that period of time as short-run.
However, firms can change level of inputs if they have more time. That is cost the long run. All costs are variable costs when we are in long run.
Answer:
Consider the possible advantages and drawbacks of a decision.
Explanation:
In Financial accounting, costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production.
Cost-benefit analysis is also known as the break even analysis, it is an important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is. It is used to determine how changes in differing levels of activities such as costs and volume affect a company's operating income and net income.
Generally, to use the cost-benefit analysis, financial experts usually make some assumptions and these are;
1. Sales price per unit product is kept constant.
2. Variable costs per unit product are kept constant and the total fixed costs of production are kept constant i.e costs can be divided into fixed and variable components.
3. All the units produced are sold i.e there is no change in inventory quantities during the period.
5. The costs accrued are as a result of change in business activities.
6. A company selling more than a product should simply sell in the same mix i.e the sales mix is constant.
Hence, a business performs a cost benefit analysis when it consider the possible advantages and drawbacks of a decision i.e whether or not it would bring value to the company or create a significant level of impact on the business.
power of sale clause
What is borrower defaults?
Any default under or breach of any such agreement or instrument is referred to as a borrower default. This includes any default or event of default as defined in any agreement or instrument evidencing, governing, or issued in connection with lender Indebtedness, including but not limited to the Credit Agreement. Any situation or event that, upon giving notice, passing of time, or both, would, unless corrected or waived, become a borrower event of default is referred to as a borrower default. If the borrower fails to pay back any advances when they are due or if legal action is taken to appoint a receiver, trustee, liquidator, or custodian of the borrower or of all or a major portion of it, a borrower default is said to have taken place.
Learn more about borrower defaults with the help of given link:-
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