Answer:
<em>a. 22.64%</em>
Explanation:
At first we are going to need to compute the Internal rate of return(IRR) (in which the current value of inflows = the current value of outflows)
Let's let the IRR be <em>x percent</em>
Therefore $4,500 = $750 / (1.0x)
+ $1,000 / (1.0x) <em>power 2</em> + $850 / (1.0x) <em>power 3 </em>
+ $6,250 / (1.0x) <em>power 4</em>
Thus, x = approximate return rate = <em>22.64 percent</em>
I think it’s a and b are correct
Answer:
His risk profile.
Explanation:
When comparing various option , Sergio must understand his risk profile and choose the option according to it.
Answer:
The maximum growth rate to my calculations is 8.32%, since it is closer to option E), I´d choose E) 8.37%
Explanation:
Hi, in order to find the growth rate given all the info of the problem, we need to use the following formula.
Where:
g = growth rate
b=retention ratio
R = return on equity
Since R = Earnings / Equity, and our dividend payout ratio (equals to 1 - b)our fromula changes to:
So, everything should look like this:
So, the growth rate is equal to 8.32% but this option is not available, therefore we´ll go for the closest one, that is E) 8.37%.
Best of luck.
Answer:
Small individual investors will benefit the most.
Explanation:
From the case given, it can be established that small individual investors represent the bulk of shareholders or business owners.
Also, from Smith Jones stock, we see that Pension and Mutual Fund constitute a bulk in the share position, and the direct intervention of shareholders motivate the management.
From the foregoing analysis, the shareholders holders have thus seek to incorporate corporate governance in the organization as a tool to reduce the agency problem between business owners and management. By this, management objectives and the shareholders could be aligned. The business owners singular objective is the profit maximization of their wealth, while the management is interested in their job security, status, mutual funds, pension and all. Since this objective of management has been duly taken care of by the shareholders, it is believer that this will boost the management morale and ultimately improve their performance. The result is thus increase in organisational performance with resultant growth in profit, share price and returns from the business. These are benefits to the individual investors.
