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viktelen [127]
3 years ago
14

Todd Mountain Development Corporation is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow a

t the rate of 10% per year. The risk-free rate of return is 8%, and the expected return on the market portfolio is 18%. The stock of Todd Mountain Development Corporation has a beta of 0.60. Using the constant-growth DDM, the intrinsic value of the stock is _________.
Business
1 answer:
PtichkaEL [24]3 years ago
8 0

Answer:

$75

Explanation:

As per the data given in the question,

Ke = risk free rate of return + beta×(market portfolio - risk free rate of return)

= 8% + 0.60 × (18% - 8%)

= 8% + 6%

= 14%

= 0.14

Now using the constant-growth DDM model :

Intrinsic value of the stock = Dividend ÷ (Ke - expected growing rate)

= $3 ÷ (0.14-0.10)

= $75

Hence, Intrinsic value of the stock is $75.

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The demand for ben & jerry's ice cream will likely be ________ the demand for dessert.
kotykmax [81]

The demand for ben & jerry's ice cream will likely be more price elastic than the demand for dessert.

<h3>What is the elasticity of Demand?</h3>

When all other conditions are equal, the elasticity of demand is a concept in economics that quantifies how responsive consumers are to shifts in the quantity desired as a result of a price adjustment. In other words, it demonstrates the number of things consumers are willing to buy as the cost of those products rises or falls.

By dividing the percentage change in quantity by the percentage change in price during a specific period, the elasticity of the demand formula is computed. It appears as follows:

Elasticity is defined as % change in quantity / % change in price.

The quantity demanded as a result of a percentage change in a product's price is hence the measure of demand elasticity. Demand can be elastic or inelastic depending on whether products' demand is more responsive to price fluctuations. When a product's demand is flexible, the desired quality is extremely responsive to price variations. When a product's demand is rigid, the desired quality does not adapt well to price variations.

Therefore, The demand for ben & jerry's ice cream will likely be more elastic than the demand for dessert.

For more information on the elasticity of demand, refer to the following link:

brainly.com/question/23301086

#SPJ4

7 0
2 years ago
Neumann Corporation is planning to issues bonds with a face amount of $2 million. If Neumann's accountant, Betty, wants to calcu
aalyn [17]

Answer:

1. Present value

2. Market

Explanation:

Neumann Corporation is planning to issues bonds with a face amount of $2 million. If Neumann's accountant, Betty, wants to calculate the expected issue she should calculate the present value of the related future cash payments using the market interest rate.

3 0
3 years ago
Read 2 more answers
What should you do if the severity of risk is low and the frequency of the risk event occurring is high?
borishaifa [10]

If the severity of risk is low and the frequency of the risk event occurring is high thanwe should Avoid the risk.

High Frequency/ High Severity- Risks are almost certain to occur and when they occur impact will be very high. In such a case it is best to use Avoidance as a risk management technique. If avoidance is not possible then prevention and insurance techniques can be considered. High frequency/ Low severity- This more serious risk and occurrence is high but the impact is low. Examples of such risks include workers’ injuries and shoplifting. A common way to manage this type of risk is through Prevention.

Low frequency/ High severity- The impact of these kinds of risks is very high and can bankrupt a business. Insurance is the best technique to manage these risks that have low loss frequency and high loss severity. Low frequency/ Low severity- Retaining and self-insuring the risk. Risk occurrence is low and impact is also very low. In most cases, the costs of managing them outweigh the cost of retaining them.

Learn more about risk frequency here:- brainly.com/question/254161
#SPJ4

4 0
2 years ago
On July 8, a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation. The following informati
BlackZzzverrR [31]

Answer:

The answer is $243,000

Explanation:

The inventory on July 8 immediately prior to the fire is the CLOSING INVENTORY.

To find this closing inventory, we need to find the gross profit first and then cost of sales.

To find gross profit:

Gross profit margin=gross profit ÷sales.

Gross profit margin is 20% or 0.2

Sales is $690,000

Therefore, gross profit is:

0.2 x $690,000

=$138,000

To find cost of sales:

Gross profit = sales - cost of sales.

Gross profit is $138,000

Sales is $690,000

Therefore, cost of sales is

$690,000 - $138,000

=$552,000.

And finally to get closing inventory:

Cost of sales = opening inventory + purchases - closing inventory.

Cost of sales = $552,000

Opening inventory = $140,000

Purchases = $655,000

Closing inventory = $140,000+$655,000-$552,000

=$243,000.

6 0
3 years ago
According to Garrett et al. (1975, 1988, 1989), language production proceeds through a series of processes: ______, ______, and
Blizzard [7]

Answer:

According to Garrett et al. (1975, 1988, 1989), language production proceeds through a series of processes: <em><u>conceptualization</u></em><em><u> </u></em>, <em><u>formulation</u></em><em><u> </u></em>, and <em><u>articulation</u></em><em><u> </u></em>.

7 0
3 years ago
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