Answer:
Expected rate of return will be 24%
So option (b) will be correct option
Explanation:
We have given dividend in next year will be $2
So dividend $
Current stock price = $50
And it is given that in next year stock price is $60
So growth rate = 20%
We have to find the expected return after 12 month, that is after 1 year
We know that current price is given by
= 24%
So expected rate of return will be 24%
So option (B) will be correct option
Answer:
The EMV for option a is $5,679,100
The EMV for option b is $5,719,200
Therefore, option b has the highest expected monetary value.
Explanation:
The EMV of the project is the Expected Money Value of the Project.
This value is given by the sum of each expected earning/cost multiplied by each probability.
So
a) proceeding immediately with production of a new top-of-the-line stereo TV that has just completed prototype testing.
There are these following probabilities:
77% probability of selling 100,000 units at $610 each.
23% probability of selling 70,000 units at $610 each.
So
(b) having the value analysis team complete a study.
There are these following probabilities:
74% probability of selling 85,000 units at $720.
26% probability of selling 70,000 units at $720.
The cost of value engineering, at 120,000. So this value is going to be dereased from the EMV.