Answer:
Explanation:
Cash flow is 530 , 690 , 875 and 1090 in 1st to 4 th year respectively
discount rate = 10 %
NPV = 530/ 1.10 + 690 / (1.10)² + 875/(1.10)³ + 1090/ (1.10)⁴
= (530x1.10³ + 690 x 1.10² + 875x 1.10 + 1090)/ 1.10⁴
= (705.43 x +834.9 +962.5 +1090)1.10⁴
= 3592.83 / 1.10⁴
= 2453.95
Discount rate 18%
NPV = 530/ 1.18 + 690 / (1.18)² + 875/(1.18)³ + 1090/ (1.18)⁴
= (530x1.18³ + 690 x 1.18² + 875x 1.18 + 1090)/ 1.18⁴
= (870.80696 +960.756 +1032.5 +1090)1.18⁴
= 2039.46
Discount rate 24%
NPV = 530/ 1.24 + 690 / (1.24)² + 875/(1.24)³ + 1090/ (1.24)⁴
= (530x1.24³ + 690 x 1.24² + 875x 1.24 + 1090)/ 1.24⁴
1010.51072+ 1060.944+1085+1090 / 1.24⁴
= 1796.14
Answer:
<u>small</u>,
<u>standardized </u>
<u>little, if any</u>
Explanation:
A perfectly competitive market form is characterized by the following:
- Large number of buyers and sellers: The number of sellers is so large that the output of a single seller is insignificant w.r.t the total industry output.
- Homogeneous products: Firms produce exactly similar or homogeneous products w.r.t color, size or attributes.
- Free entry and exit: There are no entry barriers so new firms can join the industry while loss making firms exit the industry.
- Price takers: Since all sellers offer same products, the price is determined by the interaction of market forces of demand and supply and thus each firm represents a price taker.
- Perfect knowledge on part of buyers
In the given case, since the strawberry wholsaler operates in a perfectly competitive market, she will have small and insignificant share of the market which means she cannot influence the price individually.
Also since all sellers sell the same product i.e strawberry, consumers will consider her strawberries to be standardized and there is little scope of advertising.
Answer: False
Explanation:
Classification shifting is a method used whereby the core earnings are manipulated by misclassifying the items in the income statement.
One way that managers make use of classification shifting is by reporting the operating expenses for the business as nonoperating expenses. This is usually done in order to inflate the operating income.
The statement in the question is false as classification shifting by managers doesn't lead to under-reporting of total expenses and over-statement of bottom-line net income rather it lead to over reporting.
Answer:
$74.62
Explanation:
Div₀ = $1.09
expected growth $0.19 per year
Div₁ = $1.28
Div₂ = $1.47
Div₃ = $1.66
Div₄ = $1.85
Div₅ = $2.04
then constant growth rte of 5.3%
equity cost = 7.5%
first we need to determine the stock price in year 5 using the Gordon growth model:
stock price = [dividend x (1+g)] / (Re - g) = ($2.04 x 1.053) / (7.5% - 5.3%) = $97.64
now we can discount all the future cash flows:
stock price = $1.28/1.075 + $1.47/1.075² + $1.66/1.075³ + $1.85/1.075⁴ + $2.04/1.075⁵ + $97.64/1.075⁵ = $1.19 + $1.27 + $1.34 + $1.39 + $1.42 + $68.01 = $74.62