Answer:
$2,033
Explanation:
The computation of the terminal value at the end of the year 2 is shown below:
= {Free cash flow of the firm × (1 + growth rate) × (1 + growth rate) + (1+ growth rate)} ÷ (WACC - growth rate)
= {($80 million × (1 + 0.10) × (1 + 0.10) × (1 + 0.05)} ÷ (10% - 5)
= $101.64 ÷ 0.05
= $2,033
We simply applied the above formula so that the Terminal value could arrive
Antitrust laws prevent monopolies.
<span>A monopoly is a company or business that dominates a particular market to such an extent that there is no viable competition to that company. </span>
<span>Since a monopoly does not have any other serious competition in a market, the monopoly is at greater liberty to charge higher prices and offer lower-quality prices. </span>
<span>Antitrust laws break up or limit the size of monopolies, allowing other companies to enter a market.</span>
Answer: Bill should analyze his current situation and evaluate the level of resources he has in present.
Explanation: In the given case, Bill has 100 herd and 100 acres of his farm for pasturisation, since the question is asking the advice from the aspect of a sociologist so the cost - profit analysis will not be taken into consideration.
As per a sociology approach of decision making, Bill should evaluate the capacity of his land for carrying out the operations and should set aside more land if he wants to increase the level of his activities.
Answer:
The second year’s depreciation for this equipment using the straight line method is 8,500
Explanation:
Depreciation: Depreciation is a decreasing value of the assets due to the tear & wear, obsolescence, usage,etc.
The formula to compute the depreciation under straight lie method is shown below:
= 
= 
= $8,500
The depreciation amount under straight line method should remain same over the estimated useful life
So, the second year’s depreciation for this equipment is $8,500
Answer:
Please sew solution below
Explanation:
a. What are the dividend payout ratios for each firm
Dividend payout ratio = Dividend / EPS
• Payout ratio stock A = $1.30 / $2.6 = 0.5= 50%
• Payout ratio stock B = $1.3 / $1.8 = 0.72222 = 72.22%
b. What are the expected dividend growth rates for each stock.
Growth rate = ROE × (1 - dividend payout ratio)
•Growth rate stock A = 0.08 × (1 - 50%) = 0.04 = 4%
• Growth rate stock B = 0.05 × (1 - 72.22%) = 0.01389 = 1.39%
c. What is the proper stock price for each firm
• Stock A
Price = D1 / (Re - g)
D1= $1.30 * (1 + 0.04)
= 1.352
Stock B
Price = D1 / (Re - g)
D1= $1.30 * (1 + 0.013)
= 1.3169
Therefore,
• Stock A's proper price = $1.352 / (0.08 - 0.04) = $33.8
• Stock B's proper price = $1.3169 / ($0.08 - $0.013) = $19.66
