What is the connection, if any, between comparative advantage (CA) and foreign direct investment (FDI)? Nothing. CA has nothing
1 answer:
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Answer: The dividend payout ratio is 46.19%.
We follow these steps in order to arrive at the answer:
We begin with the DuPont identity of RoE.
<u>DuPont Identity:</u>
Now,
And Debt Ratio is also expressed as:
where D/E represents the Debt-Equity Ratio.
Substituting the value of D/E ratio from the question in the debt ratio formula above we get,
----(1)
Substituting (1) in the equity multiplier formula above we get,
Substituting Equity Multiplier from above and the relevant numbers from the question in the DuPont identity we get,
The relationship between RoE and earnings growth rate g is given by the following formula:
, where p is the dividend payout ratio.
Plugging in the values in the formula above we get,
p = 0.461988304 or 46.19%
Answer:
(a) No, there is a Shortfall = $2,965
(b) $25,202.95
Explanation:
As provided current balance: $15,000
Current return on investment = 8%
Assumed this is compound interest as no amount is withdrawn in between.
Therefore, future value of $1 after 5 years @ 8% compounded per year =
1.469
Value of $15,000 on the date of 40th Birthday = $15,000 1.469 = $22,035
There is a shortfall in the budgeted amount = $25,000 - $22,035 = $2,965
If $500 annual contributions are made in the same account then value shall be:
Value of $15,000 = $22,035
Value of $500 = Value of $1 after 5 years = $6.3359
= $500 6.3359 = $3,167.95
Then total balance in account = $22,035 + $3,167.95 = $25,202.95