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3 years ago

If income increases by $100 and consumption increases by $75, the slope of the consumption function equals _____.

Business

1 answer:

Rainbow [258]3 years ago

8 0

Answer:

3/4

Explanation:

The marginal propensity to consume mpc, is the slope of the consumption function and it is what this question requires us to find

We have income increase to be = 100 dollars

Then consumption increase = 75 dollars

MPC = increase in consumption ,75/increase in income 100

= 75/100

= 3/4

Therefore the marginal propensity to consume also called the slope is 3/4

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Answer:

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Nostrana [21]

Answer:

13.8%

Explanation:

IRR is the discount rate that equates the after tax cash flows from an investment to the amount invested.

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3 years ago

The Jackson-Timberlake Wardrobe Co. just paid a dividend of $2.15 per share on its stock. The dividends are expected to grow at

tekilochka [14]

Answer:

$34.4

$37.20

c) $59.57

Explanation:

Given:

Dividend paid = $2.15

Growth rate = 4% = 0.04

Required return = 10.5% = 0.105

Now,

a) Present value = $\frac{\textup{Dividend paid}\times\textup{(1 +growth rate)}^n}{\textup{(Required return-Growth rate)}}$

for the current price n = 1

thus,

Current price = $\frac{\textup{Dividend paid}\times\textup{(1+growth rate)}^n}{\textup{(Required return-Growth rate)}}$

= $\frac{\textup{2.15}\times\textup{(1 +0.04)}^1}{\textup{(0.105-0.04)}}$

= $34.4

b) Price in 3 years

i.e n = 3

= $\frac{\textup{Dividend paid}\times\textup{(1 +growth rate)}^n}{\textup{(Required return-Growth rate)}}$

= $\frac{\textup{2.15}\times\textup{(1 +0.04)}^3}{\textup{(0.105-0.04)}}$

$37.20

c) Price in 15 years

i.e n = 15

= $\frac{\textup{Dividend paid}\times\textup{(1 +growth rate)}^n}{\textup{(Required return-Growth rate)}}$

= $\frac{\textup{2.15}\times\textup{(1 +0.04)}^{15}}{\textup{(0.105-0.04)}}$

= $59.57

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3 years ago