The maturity risk premium on the 2-year Treasury security is C. 1.39%
Using this formula
rd = r* + IP + MRP
Where
rd represent Required rate of return on 2-year Treasury Security = 6 75%
r* represent real risk free return = 3.18%
IP represent Inflation Premium = 2.18%
MRP represent Maturity Risk Premium
Let plug in the formula
6.75% = 3.18% + 2.18% + MPR
6.75%=5.36%
MRP=6.75% -5.36%
MRP = 1.39%
Inconclusion the maturity risk premium on the 2-year Treasury security is C. 1.39%.
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Answer:
- $33,678.21
Explanation:
Cash flow Summary of the Project will be as follows
Year 0 = $410,000 + $3,000 = - $413,000
Year 1 = $101,000
Year 2 = $101,000
Year 3 = $101,000
Year 4 = $101,000
Year 5 = $101,000 + $41,000 + 3,000 = $145,000
So the Net Present Value can now be calculated using the CFj function of a Financial calculator as follows :
- $413,000 CF 0
$101,000 CF 1
$101,000 CF 2
$101,000 CF 3
$101,000 CF 4
$145,000 CF 5
i/yr = 13%
Shift NPV = - $33,678.21
The shareholder equity is equal to:
$28/share * 13 700 shares = $ 383,600
This is the total capital of Davidson International. Now, assuming that there is no additional income since it is not implied in the problem, the total equity does not change. However, the shares become: 13,700 + 500 = 14 200 shares.
Price per share now becomes:
$383 600 / 14 200 shares = $27/share
Answer:
increase the price of our products or services.
Explanation:
When the price elasticity is less than 1 (inelastic), then an increase in the price of our products or services will result in a proportionally smaller decrease in the quantity demanded. Therefore, by increasing our prices, we can increase total revenue even if the quantity demanded decreases a little.
When consumption increases, factories produce more, consequently having to expand, when they expand they hire new employees, meaning that more people have money to buy more things and boost the market.
It is almost like the balance of an ecosystem, if everything works well, the tendency is to continue improving