Answer:
Quantity demanded of matches will remain unchanged, Quantity demanded of tomatoes will rise
Explanation:
Law of demand states that there is an inverse relationship between price of a good and it's quantity demanded, keeping other factors affecting demand as constant.
Price elasticity of demand refers to degree of responsiveness of quantity demanded of a good with respect to a change in it's price.
In the given case, price elasticity of demand for matches is inelastic since requirement of matches is fixed and consumer won't buy additional matches if the price is reduced. Thus a price decease will not increase the quantity demanded of matches.
On the other hand, tomatoes have various uses and thus, their demand is elastic. So if price of tomatoes drops, the quantity demanded of tomatoes would rise, keeping other factors affecting demand as constant.
It is challenging to calculate the company's cost of equity due to its private ownership. Therefore, it seems sense that you would wish to assess the cost of capital for SMI using the pure play approach. Tesla has been picked as the representative business.
To ensure as much resemblance when determining the riskiness of the project, the pure play strategy simply advises that we select a public firm that is 'purely' engaged in the type of work or projects we are going to carry out.
Tesla appears to have been chosen as a representative by SMI because it is a vehicle manufacturer and works in battery development.
Improvements
1) Decide on an appropriate pure play business. in and of itself, challenging. By then looking for pure play companies that manage those kinds of projects, they may identify distinct projects in their portfolio and discover appropriate betas for each of their different initiatives.
2) The analysis of options and futures on the shares of the publicly traded company that is utilized for pure play can be used to determine forward-looking betas. This will resolve the problem with betas that look ahead.
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The principal difference between public and privately held companies is that public companies have shares that can be publicly traded on a stock market. A privately held company might become a publicly held company by conducting an initial public offering, which is the offering of shares of the company to the public.
Answer:
4,494.68
Explanation:
Formula
Fc = Ic (1+i) ^ n
Where;
Fc= Final Capital
Ic= Inicial Capital
i= interest rate
n= period
In this particular case:
Fc = 1234 (1+0.034556) ^ 8 + 2345 (1+0.03456) ^ 6
Fc = 4,494.68
