Answer:
Gadget will have higher earning.
Explanation:
Price Earning Ratio is the ratio of Market price to the earning per share. PE Ratio measure the effect of earning over the market price of the company.
Widget
Stock Price = $30
Earning per share = $2
PE ratio = $30 / $2 = 15 times
Gadget
Stock Price = $30
Earning per share = $2
PE ratio = $20 / $1 = 20 times
Gadget will have higher earning.
The present value of of $6,811 to be received in one year if the discount rate is 6.5 percent will be $6, 395.31.
What does Present Value mean?
A financial concept that calculates the current value of a future sum of money or stream of cash flows is present value. It's used to compare the relative worth of different amounts of money that aren't available at the same time. The inverse of future value. The sum of future investment returns discounted at a specified rate of return is calculated as the present value of money you expect from future income.
What is Financial concept?
Financial concepts are the fundamental principles and theories of finance, which provide guidance on how to assess and manage financial risks, return, and value. These concepts include the time value of money, diversification, risk-return trade-off, capital budgeting, and portfolio selection. Financial concepts are essential for making sound financial decisions and investments.
The procedure to find an present value:
Present Value = FV/ (1+i)^n
6,811/(1+0.065)^1
6, 395.31
To know more about Present value,
brainly.com/question/15904086
#SPJ1
Answer:
b. Continue operating as the firm is covering all the variable costs and some of the fixed costs
Explanation:
A firm should shutdown operations if its price is less than average variable cost.
The price the firm sells is $15
Average variable cost is $10.
Price is greater than average variable cost in excess of $5.
The $5 covers some of the average fixed cost.
I hope my answer helps you
