Answer:
Price of stock = $40
Explanation:
According to the dividend growth model, the price of a stock is the present value of expected dividend discounted at the required rate of return.
This is done as follows:
Price of a stock = D×(1+r)/(r-g)
D(1+g) - Dividend for next year = 100%-40%× $3 = $1.8
g- growth rate - 10%
r- required rate of return - 15%
Price of stock = 1.8× (1.1)/(0.15-0.1)
= $40
Answer:
Explanation:
The student loan is set up to have a very low interest rate. They are mostly in the 2 to 3 % range if you qualify. The worst is a payday loan. Those have double digit rates associated with them.
Answer:
Student responses will vary, but should include: A young investor has years of earning power and can take greater risks because he/she has time to make-up for losses. An older investor needs more security and current income from their investments because they are using it to retire on or they need it to continually grow so that they can retire.
Explanation:
I think this is a trick question. Say, there are 2 pounds of cocoa / 1 gallon of chocolate ice cream. But then the problem only mentions the production of eight gallons of <em>strawberry</em> ice cream, not chocolate ice cream.
However, if they're somehow related (like they are made from the same machine), then you need 16 pounds of cocoa to produce 8 gallons of chocolate ice cream.
Answer: B. The firm would install the filter at a cost of $ 300,000.
Explanation:
If the community owns the property rights, they would be able to demand that the firm pay the external cost of $500,000 per year.
If on the other hand the company installed a filter, it would cost them $300,000 but then they would not have to pay the community the $500,000.
The lower cost option would be to install the filter for $300,000 which is what the firm would do.
