Answer:
Value of a share = $15
Explanation:
<em>According to the </em><u><em>dividend valuation model</em></u><em>, the value of a share is the present value of expected dividend discounted at the required rate of return. </em>
This model is expressed in the formula below;
Value of a share = D/Ke
D- dividend payable in year one
Ke- cost of equity
Value of a share = 2.25/0.15
Value of a share = $15
Value of a share = $15
John's assumptions in making this decision are that the three new product engineers are not capable writers and that their writing is terrible. John also believes that the only way the technical manual can be brought up to company standards is by offering a course in technical writing.
This is not an appropriate strategy for resolving the issue, as decisions should never be made based solely on assumptions, such as the fact that the product engineers in question are new hires and therefore unable to write. This is further explained below.
<h3>What is a decision?</h3>
Generally, a decision or conclusion was arrived at after careful deliberation.
In conclusion, When John was making this choice, he made a number of assumptions, one of which was that the three new product engineers are not competent writers and that their writing is horrible. John is also of the opinion that the only way the firm's technical handbook can be brought up to the standards of the corporation is by providing students with the opportunity to take a course in technical writing.
Because choices should never be made entirely based on assumptions, such as the fact that the product engineers in question are new employees and hence unable to write, this is not a suitable technique for fixing the problem. Decisions should never be made solely based on assumptions.
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Answer:
Irrational decision
Explanation:
Irrational decisions refer to those decisions which are not taken after enough deliberation, ignore the rationale, facts and logic, are rather decided out of whim and impulse and usually instantly decided.
In the given case, Joe was not willing to pay more than $500 cash yet eventually ended up paying $600. Even if the $25 gift card is considered, he ended up paying $575 which is more than he had decided to pay.
The choice of the consumer here is not rational or rather irrational since, he without considering other alternatives or exercise of judgement, without evaluating his costs, impulsively opted for the credit card lured by $25 gift card.
As per the economic theory, Joe's decision would be referred to as irrational.
Answer:
Incremental net income from further processing is $566,600
Explanation:
First of all, it would be necessary to compute profit from selling the product at cut off point and profit when it is further processed in order to determine whether or not it is worth processing further:
Sales revenue $400,000
cost of production(19,000*$25) $475,000
Loss from selling ($75,000)
Further processing:
sales revenue
Product B(5200*$108) $561,600
Product C(11,000*$55) $605,000
Total revenue $1,166,600
total cost
cost of production ($475,000)
cost of further processing ($200,000)
total costs ($675,000)
Profit $491600
By further processing the incremental net profit is $566,600
($491,600-(-$75000)
