Answer:
Required rate of return = 10.75%
Explanation:
<em>The value of a stock using the dividend valuation model, is the present value of the expected future dividends discounted at the required rate of return. The required rate of return is the cost of equity
</em>
The model is represented below:
P = D× (1+g)/ ke- g
Ke- cost of equity, g - growth rate, p - price of the stock
This model can used to work out the cost of equity, as follows:
Ke = D× (1+g)/p + g
Ke = (1.48× 1.05)/27 + 0.05
Ke= 0.107555556
Required return = 0.1075 × 100 = 10.75
Required rate of return = 10.75%
Answer:
Positive effect advertisement
Explanation:
Base on the scenario been described in the question, the effect of the Ocean fresh because of the positive effect advertisement. This so because he discovered that ocean fresh is more cheaper and has almost the same price with that of stainz-out.
We can define positive advertisement as some kind of marketing strategies which show the target population all the positive effects which one can receive due to any particular product or service
Answer:
Normal good
Explanation:
Income effect Is change in quantity demanded when the consumers purchasing power change as a result of a change in real income.
Substitution effect is when quantity demanded falls as a result of rise in price of a good which leads consumers to purchase cheaper alternatives.
A normal good is a good whose demand increases as income increases.
If the price of a normal good falls, the real purchasing power of the consumer increases and the consumer buys more of the good. Also, the consumer substituites from more expensive alternative goods to the more cheap normal good. The income and substitution effect both move in the same direction.
