Decision making under uncertainty where different outcomes are possible with different probabilities form the basis of risky decision making.
Before going any further, it is important to establish the distinction between risk and uncertainty because the two are frequently confused. We went into great detail about the distinctions between risk and uncertainty. Making Decisions in an Uncertain World Even though we are aware that outcomes are unpredictable, we don't try to give them probabilities.
The components of risky decision include:
A risk assessment process, determination of the likelihood and probability of a risk occurrence and its consequences (qualitatively and quantitatively), as well as risk characteristics and factors including its onset and duration, Risky decisions (prioritization, mitigation, and treatment), a risk representation system (risk matrix or heat map).
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Answer:
Present value=Cash flows*Present value of discounting factor(rate%,time period)
=50/1.07+50/1.07^2+50/1.07^3+250/1.07^4+400/1.07^5+600/1.07^6
=$1006.94(Approx)
Future value=1006.94*(1.07)^6
=$1511.14(Approx).
Explanation:
We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
Answer:
0,95
inelastic
Explanation:
0.21
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
Price elasticity of demand = midpoint change in quantity demanded / midpoint change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases
Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price.
Answer:
Intrinsic value is $45
Explanation:
The starting point to determining Rivoli Company intrinsic value is to compute the earning after tax as shown below:
Earnings after tax=earning before tax*(1-tax rate)
earnings before tax is $600,000
tax rate
earnings after tax=$600,000*(1-0.25)
=$600,000*0.75
=$450,000
Then we need to compute earnings per share;
Earnings per shares=earnings after tax/weighted average number of shares
=$450,000/100,000
=$4.5
Intrinsic value=earnings per share/cost of equity
cost of equity is 10%
intrinsic value=$4.5/10%
=$45
Answer:
D, Mutual mistake
Explanation:
AJ's and Harry's expectations of the truck to pull a trailer is a mistake on both the paths of the buyer and seller as they assumed rather than confirmed the strength of the truck. For this reason, the contract can be rescinded on the grounds of mutual mistake by both parties involved.
Cheers.