A savings account is called a time deposit because the bank can require you to make prior notice before withdrawal.
What is a time deposit?
The time deposit means a deposit kept in bank's custody which cannot be withdrawn before a particular date or can only withdrawn by notifying the bank of the withdrawal date well ahead.
The most common example of time deposit is the certificate of deposit(CD), which is the document issued to a depositor stating the amount that has been deposited, the duration of deposit, the interest rate applicable including the earliest date upon which withdrawal from the account can be initiated or executed.
In this case, the missing word is time, which when combined with deposit gives time deposit.
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Answer:
B. False
Explanation:
Opportunity cost of producing a good for the supplier are the profits that they could make from other goods that they are not producing, for example if a supplier is producing cars the opportunity cost are the profits that the supplier can make by producing other products instead of cars. This statement is wrong because when the price of a good increases the opportunity cost of producing the good does not change because the opportunity cost of producing the good depends on the price and profits of other goods. In this case when the price increases the suppliers will supply more of this good because the opportunity cost of not producing the good increases because they can make higher profits now.
Answer:
P0 = $216.18147448015 rounded off to $216.18
Explanation:
The dividend discount model (DDM) can be used to calculate the price of the stock today. DDM calculates the price of a stock based on the present value of the expected future dividends from the stock. The formula for price today under DDM is,
P0 = D1 / (1+r) + D2 / (1+r)^2 + ... + Dn / (1+r)^n + [(Dn * (1+g) / (r - g)) / (1+r)^n]
Where,
- D1, D2, ... , Dn is the dividend expected in Year 1,2 and so on
- g is the constant growth rate in dividends
- r is the discount rate or required rate of return
P0 = 4 * (1+0.5) / (1+0.15) + 4 * (1+0.5)^2 / (1+0.15)^2 +
4 * (1+0.5)^3 / (1+0.15)^3 + [(4 * (1+0.5)^3 * (1+0.1) / (0.15 - 0.1)) / (1+0.15)^3]
P0 = $216.18147448015 rounded off to $216.18
How do I report them for you
Answer and Explanation:
The computation is shown below:
Year Cash flow PVF at 12% PV at 12%
D0 0 0 1 0
D1 0 0 0.89286 0
D2 0 0 0.79719 0
D3 2.25 2.25 0.71178 1.601505 (A)
D4 2.25 × 1.117^1 = 2.51325 0.63552 1.597221 (B)
D5 2.25 × 1.117^2 = 2.80730 0.56743 1.592946 (C)
Now
Horizon Value at D5 is
= Next Year Dividend ÷ (Required Rate -Growth rate)
= (2.25 × 1.117^2 × 1.036) ÷ (0.12 - 0.036)
34.6234 34.6234 0.56743 19.64634 (D)
Current Value 24.43801 (A + B + C + D)
Horizon Value = 34.62
Intrinsic Value = 24.43
Now
Current expected dividend yield is
= Dividend ÷ Market Price
= 0 ÷ 24 ÷ 43
= 0 %
And, the minimum expected capital yield should be equivalent to the required rate of return i.e 12%
The company should not paying the dividend because it involves various reasons lime expansion plans, seasonal & cyclical sales, buy back shares
