Ezra runs a gyro stall at the local farmers' market. He would like to expand and open his own shop downtown. He has made the cha
1 answer:
Answer: Economic choices result in trade-offs.
Explanation:
The chart simply purports to show that when making economic decisions, you will have to accept trade-offs because resources are not infinite.
For instance, in order to expand, you will need to take on more financial risk. In that same vein, in order to serve more people, you will have to divide time between two stalls and might end up closing a stall.
Trade-offs simply have to be made.
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Answer:
Explanation:
From the given information:
The current price =
2. The value of the stock
Calculate the earnings at the end of 5 years:
Terminal value year 5 =
=$75.526
Discount all potential future cash flows as follows to determine the stock's value:
=$ 54.1945
As a result, the analysts value the stock at $54.20, which is below their own estimates.
3. The value of the stock
Calculate the earnings at the end of 5 years:
Terminal value year 5 =
=$53.8773
Discount all potential cash flows as follows to determine the stock's value:
=$39.460
As a result, the price is $39.460, and the other strategy would raise the value of the shareholders. Not this one, since paying a 100% dividend would result in a price of $54.20, which is higher than the current price.
Notice that the third question depicts the situation after 5 years, but the final decision will be the same since we are discounting in current terms. If compounding is used, the future value over 5 years is just the same as the first choice, which is the better option.
The presumption in the second portion is that after 5 years, the steady growth rate would be the same as measured in the first part (1).