Answer:
The value of the stock today is $60.48 and option A is the correct answer.
Explanation:
The two stage growth model of DDM will be used to calculate the value of this stock today. The two stage growth model is used when there are 2 different dividend growth rates. The 30% growth rate can be termed as g1 while the 7% growth rate which is assumed to remain constant forever can be termed as g2.
The formula for price/value under this model is,
Value or P0 = D1 / (1+r) + D2 / (1+r)^2 + ... + Dn / (1+r)^n +
[Dn * (1+g2) / (r - g2)] / (1+r)^n
Value today = 0.8 * (1+0.3) / (1+0.1) + 0.8 * (1+0.3)^2 / (1+0.1)^2 +
0.8 * (1+0.3)^3 / (1+0.1)^3 + 0.8 * (1+0.3)^4 / (1+0.1)^4 +
[ (0.8 * (1+0.3)^4 * (1+0.07) / (0.1 - 0.07)) / (1+0.1)^4 ]
Value today = $60.60 which is closest to $60.48 and A is the answer.
The difference of $0.12 in the answer is because of the rounding off as the immediate calculations were not rounded off in the calculation of $60.60
Answer:
The correct answer is: declines; higher economic; will incur losses.
Explanation:
A perfectly competitive firm has 1,000 firms that are operating in the long-run equilibrium.
Out of these firms, 100 firms have adopted a new technology that has caused their average cost of production to decline.
These firms will be able to produce more output at the same cost. As a result, their supply will increase, this will cause the price to decline.
The firms with new technology that are facing a lower average cost of production will earn positive economic profits as they have lower costs.
The firms with old technology that have higher production costs will incur economic losses as they have higher costs.
Do you have answer choices?
Answer:
12.3076
Explanation:
Receivables Turnover =
Here Net Credit sales = $8,000,000
Average Receivables =
Opening Receivables = $600,000
Closing Receivables = $700,000
Average Receivables =
Receivables Turnover =
12.3076
Answer:
Warranty repair Expense (Dr.) $200
Warranty Payable (Dr.) $200
Explanation:
The warranty expense is the estimate of probable expense that will incur due to fault in the product. The estimated repair is the 4% of skates sold. If 500 pairs of skates are sold then out of them 4% will require repair. The repair for the faulty skates will cost $10. The total cost will be $200,
500 pairs of skates * 4% * $10