Answer:
$74.62
Explanation:
Div₀ = $1.09
expected growth $0.19 per year
Div₁ = $1.28
Div₂ = $1.47
Div₃ = $1.66
Div₄ = $1.85
Div₅ = $2.04
then constant growth rte of 5.3%
equity cost = 7.5%
first we need to determine the stock price in year 5 using the Gordon growth model:
stock price = [dividend x (1+g)] / (Re - g) = ($2.04 x 1.053) / (7.5% - 5.3%) = $97.64
now we can discount all the future cash flows:
stock price = $1.28/1.075 + $1.47/1.075² + $1.66/1.075³ + $1.85/1.075⁴ + $2.04/1.075⁵ + $97.64/1.075⁵ = $1.19 + $1.27 + $1.34 + $1.39 + $1.42 + $68.01 = $74.62
A business person would most likely use seed capital to start a new business or use it to contribute financially to the business.
Answer:
The correct answer is "substitution effect"
Explanation:
When the price of a good or service rises, and the consumers change into a cheaper product with similar characteristics; immediately the market experiencing a decrease in sales for these changes; That phenomenon is called substitution effect.
For Example:
When the chicken price increases, the consumers prefer to consume pork; Immediately the chicken sales decrease for this decision. That is called a substitution effect.
Answer:
Net Cash inflow from operating activities = $125,000
Explanation:
Cash flow from operating activities means only those transactions involving cash which are related to daily business of the company.
Net income = $100,000
Add: Depreciation = $17,500
Add: Amortization = $5,000
Add: Loss on sale of equipment = $2,500
Net Cash inflow from operating activities = $125,000
Note:
1. Depreciation and amortization are non cash expenses thus, added back.
2. Loss on sale of equipment is added as does not relate to operating activity. The entire amount received from sale of equipment is added to investing activity.
Final Answer
Net Cash inflow from operating activities = $125,000
