this type of business is made up of family members and close friends and are not allowed to sell their shares to the public.
1 answer:
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Answer:
$29.70
Explanation:
Retention ratio = 1 - payout ratio
= ( 1 -0.5 )
= 0.5
Growth rate, g = ROE × Retention ratio
= 0.15 × 0.5
= 0.075
= 7.5%
Required return = Risk - free rate + [ Beta × (Market rate- risk-free rate) ]
= 2.5% + 1.44 × (11% - 2.5%)
= 14.74%
Intrinsic value =
=
= 29.69 ≈ $29.70
Answer:
Wage rate = $960
Explanation:
Supply of labor is the number of hours workers are willing to work at a given real wage rate. When wage rate increases, supply of labor also increases because more people are encouraged as now they can obtain a higher income. When wage rate decreases, labor supply also decreases.
<em><u>View diagram</u></em>
In this case, however, there has been a decrease in supply, causing the supply curve to shift from S to S1. This can be due to many reasons such as migration, increase in minimum working age or increase in interest in education causing more people to study. When the supply of labor falls, there are less people available for work. Thus, demand exceeds supply, causing a shortage. Hence, the pressure causes price, i.e. wage rate to increase. To determine by how much the increase is, cross-multiplication can be used:
At 25 laborers, wage rate is $600 (25 = 600)
At 15 workers, wage rate is X (15 = X)
We now substitute for X, which is the amount by which wage rate will increase.
25 / 600 = 15 / X
Thus, 25X = 9000 (600 x 15)
9000 / 25 = X
X = 360.
Hence, wage rate at 15 laborers is 600 + 360 = $960
