Answer:
Year Cashflow [email protected]% PV
$ $
1 150 0.8929 134
2 150 0.7972 120
3 150 0.7118 107
4 250 0.6355 159
5 300 0.5674 170 6 600 0.5066 <u>304 </u>
<u> 994</u>
Explanation:
In this case, we will discount the cashflow for each year at 12% per annum. The discount factor can be obtained by using the formula (1 + r)-n. Then, we will multiply the cashflows by the discount factors in order to obtain the present values. All the present values will be added up.
"Martha is in her late teens. She lost her father in the war several years ago. Just like her father...." the sentence in the passage is an example of a real-world situation that could restrict Martha’s decisions "To make matters worse, Martha might not qualify for the military because of her petite and fragile frame.". This is further explained below.
<h3>What is a passage?</h3>
Generally, a passage is simply defined as a part or chunk of a piece of writing.
In conclusion, Martha in the passage Martha saw a real-world situation and this was "To make matters worse, Martha might not qualify for the military because of her petite and fragile frame." was on that could that restrict Martha’s decisions
Read more about passage
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Answer: <em>Option (B) is correct.</em>
From the comprehension given, the following is the most suitable description using principles of economics, "When markets do not achieve efficiency, government intervention can improve overall welfare."
At times it is possible to minimize externalities with government intervention, such as in this particular case government intervention could prevent the extinction of a specific type of fish, which will further lead to lead to an improvement in overall welfare.
Answer:
The best estimate of the company’s cost of equity is 12%
Explanation:
Estimate of the company’s cost of equity = (Required Return as per Capital Asset Pricing Model + Cost of Equity) / 2
Required Return as per Capital Asset Pricing Model = Risk Free rate + Market Risk Premium * Beta
= 4.9 % + ( 6% * 1.2)
= 0.049 + 0.06 * 1.2
= 0.049 + 0.072
= 0.1210
= 12.10%
Cost of Equity = (Expected Dividend/Price) + Growth Rate
= [( $ 1.30 * 1.08) / $ 36] + 8%
= 0.039 + 0.08
= 0.1190
= 11.90%
The best estimate of the company’s cost of equity = (12.10 % + 11.90 % )/ 2
= 24% / 2
= 12%
Hence, the best estimate of the company’s cost of equity is 12%
