Answer:
A. Market Capitalization rate = 13%
B. Intrinsic Value = $46.22
Explanation:
<em>A. Market Capitalization rate:</em>
CAPM should be used to calculate market capitalization from the given data. Following is the formula for CAPM
r = risk free rate
M = market portfolio return
B = beta
Solution:
CAPM = 13%
<em>B. Intrinsic Value of stock</em>
Gordon Growth Model (GGM) should be used to calculate intrinsic value of stock based on the given data.
Following is the formula for GGM
D = Current Dividend
g = Dividend Growth rate
r = market capitalization rate (CAPM calculated in part A)
Solution:
DDM = $46.22
<em>Note: All values are rounded off to two decimal points.</em>
Answer is given below
Explanation:
type of cash flow activity
a. Redeemed bonds ---------------Fiancing
b Issued preferred stock -----------Fiancing
c. Paid cash dividends --------------Fiancing
d. Net income --------------------------Operating
e. Sold equipment --------------------Investing
f. Purchased treasury stock -------Fiancing
g. Purchased patents ----------------Investing
h. Purchased buildings -------------Investing
i. Sold long-term investments ----Investing
j. Issued bonds ------------------------Fiancing
k. Issued common stock -----------Fiancing
Answer:
B. Depletion will be $950,000 during 2018
Explanation:
Cost $10,000,000
Residual Value ($500,000)
Cost to be depleted $9,500,000
No. of Carats to be extracted over the life of mine 500,000
Per carat depletion (9,500,000/500,000) $19
Depletion for the year 2018 $19*50,000=$950,000
This will be deducted from revenue as depletion for the year.So option B is correct.
Answer:please refer to the explanation section
Explanation:
The question is incomplete, The amount that each firm must produce is not given or the Quantity/demand equation that each firm faces is not given. We use a firm's quantity/demand equation to calculate how much each firm should produce and then work out the number of firms that should exist in the industry.
let us assume quantity produced by each firm is given by this equation;
Q = 1900 + 15000Price
We need to plug the Price of $2.54 per unit Vitamin Bottle to the quantity equation. Q = 1900 + 15000(2.54) = 40 000
each firm must produce 40 000 units
Number of firms that should exist = Total Market Quantity/Firms Quantity Number of firms that should exist = 1055 560 000/40 000
Number of firms that should exist = 26389
When the price is $2.54, with each firm Producing 40000 units, 26389 firms should exist in the market to cover the total Market Quantity of 1055 560 000.
The question may provide you with the Quantity that each firm must produce, in that case you simple divide total market quantity by the firm's quantity to find number of firm that should exist.
When you are given quantity equations you use the price to work out quantity produced by each firm and then Divide the Market Quantity by Firm's quantity to find number of firms that should exist
