The cost of Equity is the investor's required return and according to the given information D1 =$4.57, SP =$73.59, g = 3.70% The DDM model which derives the current price of the stock by discounting it future dividends will be used in this calculation
The constant growth model of the DDM is used to calculate the price of the share or the fair value per share based on a constant growth in dividends and the required rate of return which is also known as cost of equity.
Plugging in the available values in the formual we can calculate the cost of equity or the required rate of return.
According to what I'm understanding of the table you got the following:
The equilibrium will be when both forces meet in this case, it is clear that it is happening at a price equal to $7 which generates a supply of 50 units and a demand for 50 units. Both have the same value so it is equilibrium
The consumption is an act of spending the money from an income. The marginal propensity to consume is the proportion increase in the amount that a consumer is spending. The savings then decline if the consumption increases. In the given scenario the consumption will not raise even if there is an increase in national income and taxes are kept fixed at previous level. This is because marginal propensity to consume is same.
Cost management is a process or method of reducing cost of operation or production expenses of the business so as to provide cheaper goods and/or services to consumers.
It helps a firm forecast future expenditures in other to achieve their budgeting goals.
This is an example of a moral hazard, which is when someone is more likely to engage in dangerous behavior when they perceive that they are protected from the consequences.
