Answer: B- Purchase of the company's own stock
Explanation:
Stock repurchases is a transactions that causes a negative cash flow from financing activities
Answer:
1.78 times
Explanation:
The computation of the equity multiplier is shown below;
Equity multiplier is
= Total assets ÷ Total stockholders equity
= $6,675 ÷ $3,750
= 1.78 times
Working notes;
Calculation of total stockholders equity
Total stockholders equity = Common stock + Retained earnings
= $2,970 + $780
= $3,750
Answer:
The price 3-years from now will be of $52,50
Explanation:
<u>We solve for g using the Gordon model:</u>
As we don't know the rate of return we solve ofr that fist using CAPM:
CAPM (Capital Assets Price Model)
risk free 0.049
market rate 0.099
premium market = market rate - risk free 0.05
beta(non diversifiable risk) 0.9
<em>Ke 0.09400</em>
We plug that in the gordon equation and solve for g:
2.25 = 0.094 x 46 - g x 46
(2.25 - 4.324) / 46 = -g
-0.0450869565217391 = -g
g = 0.045087
In the gordon model the price of the stock increases at the grow rate:
as P = D/(r-g)
P1 = D(1+g)/r-g)
P1 / P = D(1+g)/(r- g) / D/(r- g) = 1 + g
Answer:
The opportunity cost is $7.
Explanation:
The opportunity cost involved in a decision is the cost of sacrificing its second-best alternative.
A college student could babysit her professor's child at an hourly wage of $7; she could work at the college library at a wage of $6; or she could finish her economics homework assignment.
If she decides to finish her assignment she is letting go wage of $7 and $6. Here, the second-best alternative is $7, so it is the opportunity cost.
<span>A raw material or primary agricultural product that can be bought and sold, such as copper or coffee. Maybe the other guy can do it in English next time.</span>