Answer: a. $31.5 ; b. $45.
Explanation:
A. What price should the stock sell at? The discount rate is 15%.
The dividend for the first year will be:
= $3 × (100% + 5%)
= $3 × 105%
= $3 × 1.05
= $3.15
Since Price = D1/Ke - g
Price = 3.15/0.15 - 0.05
Price = 3.15/0.10
Price = $31.5
B. How would your answer change if the discount rate was only 12%?
Price = D1/Ke - g
Price = 3.15/(0.12 - 0.05)
= 3.15/0.07
= $45
The answer changed because the discount rate has been reduced which led to the increase in the answer.
Answer:
Read the explanation below
Explanation:
Dollar-cost averaging is based on the belief that prices of stock fluctuate around a normal level. Without this notion, it will not be possible to determine what can be seen as high or low now compared to the future.
The benefits of Dollar Cost Averaging attracts investors to employ. These benefits include:
1. It contributes on a regular basis to portfolios of investment.
2. The problem of market timing is eliminated especially for investors do not have time to track the market regularly or who lack the understanding of the market.
3. The cost basis to consumers on stocks whose values decline are is reduced.
4. It is easy to set up and not expensive especially for investors with no huge amount of money to invest. Like the example in the question, it easier for a salary earner to invest $500 monthly than investing $5,000 in a day.
Despite these advantages, dollar-cost averaging has its own disadvantages, and these include:
1. It has been found out in different studies that investor that can time the market correctly and invest a lump sum amount receive a higher return in the long run than what dollar-cost averaging can fetch.
2. The transaction costs paid by the investors significantly increased because of more number of different transactions when brokerage fee is high.
I wish you the best.
The correct option is "a". The given statement is true.
When there is not much demand and you produces a lot, it will affect the quality of the product and that leads to customer dissatisfaction. When the production is according to sale, and the quality is good the customers will automatically satisfied with the product.
Answer:
$25 per setup
Explanation:
With regards to the above, activity rate is computed as;
= Activity cost pool resources / Activity driver
Activity cost pool resources = $125,000
Activity driver = 5,000
Activity rate for machine setup = $125,000/5,000 = $25 per setup
Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.