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Stolb23 [73]
2 years ago
13

Your bank account pays an interest rate of 9 percent. You are considering buying a share of stock in XYZ Corporation for $90. Af

ter 1, 2, and 3 years, it will pay a dividend of $4. You expect to sell the stock after 3 years for $100.Is XYZ a good investment?
Business
1 answer:
dlinn [17]2 years ago
7 0

Answer: It is NOT a good investment.

Explanation:

Your bank account pays an interest of 9% per annum. This can be used as a discount rate to discount the dividends and the final Sales price to the present to see if the present value of Future benefits is more than what the stock is valued at now.

If the Present Value of the future benefits is higher than the cost now, XYZ is a good investment.

$4 are expected every year for 3 years and then on the third year, the stock will be sold for $100.

Discounting therefore gives us,

= (4 / (1 + 9%) ) + (4 / (1 + 9%)^2) + ( 4 / ( 1 + 9%) ^ 3) + ( 100 / ( 1 + 9%) ^ 3)

= 87.34

= $87.34

The Present Value of the future benefits including the future sales price is $87.34 which is less than the current cost of the stock at $90.

XYZ is NOT a good investment.

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What type of market entry strategy do you recommend for Burger Time?
morpeh [17]

Answer: Franchise

Explanation:

Franchise could be defined as when new or intending growing businesses use the name of bigger or renowned business names, brands to run their own business. This helps for popularity sake, and making the goods of the smaller business to be marketable through the awareness that has been built in the trust that people have known the big firm for. Most new firms looking to break a competitive market aim at doing this.

6 0
3 years ago
. A firm begins the year with a Book Value of $10 million. During the year it generates $5 million in net profits. It paid $1 mi
Keith_Richards [23]

Answer:

b) $12 million

Explanation:

The new Book Value of the firm at the bigining of next year is $12 million.

In the calulation of Net Pfofit, Interst on loan has already been deducted, so deducting it from the total calculation will be wrong.

hence, only dividend paid will be removed from the addition of the Book Value anf the Net profit.

Closing balance = Opening Book Value + Net Profit - Dividend Paid

Note - The Net Profit is already ne of interest on loan.

Closing balance = $10 + $5 - $3

Closing balance is $12

3 0
3 years ago
In macroland potential gdp equals $20 billion and real gdp equals $19.2 billion. macroland has a(n) ______ gap equal to ______ p
Jet001 [13]
Potential GDP = $20 
Real GDP =$19.2  
so an output gap is measured relative to potential output and it is calculated according to the formula [( X - Y ) Ă· Y] Ă—100. In this case, the output gap is [($10 billion - $8 billion) Ă· $8 billion] Ă—100 = 25%.
6 0
3 years ago
The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.
Lorico [155]
The correct option from the given choices is; "<span>c. price, quantity demanded".
</span>
The demand curve refers to graphical representation, which is used to show the relationship amongst cost (price of good) and quantity.Normally, the cost will show up on the left vertical axis, and on horizontal axis the demand of quantity is represented. The relationship between them is inverse relation or we can say that both price and quantity are inversely related to each other.
3 0
3 years ago
Read 2 more answers
Natural rate of unemployment:
Mekhanik [1.2K]

Answer:

(a)  

Common pace of joblessness is a mix of auxiliary and frictional joblessness.  

Basic Unemployment: Occurs contribution to modern rearrangement or innovative change.  

Frictional Unemployment: When individuals are in the middle of occupations for example the way toward moving from one occupation to other.  

On the off chance that an enactment making it progressively hard for the organizations to terminate laborers is presented, at that point despite the fact that the activity discovering rate will stay consistent, the consistent state joblessness will stay steady. Less individuals will stay jobless at a specific time.  

(b)  

The activity discovering rate will change provided that prerequisite of a severance bundle will build the expense of work. This implies the business will most likely decrease the pace of contracting which will along these lines increment the pace of joblessness. Subsequently, the enactment would diminish the activity discovering rate.  

(c)  

The expense of contracting will increment if an enactment like this is passed. The enactment presents the idea of severance bundle for terminated laborers. This expands the expense of employing for the firm. Along these lines, the business will diminish the employing to decrease the expenses. This will diminish the business rate in a nation which will make a higher regular pace of joblessness.

6 0
3 years ago
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