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Korolek [52]
3 years ago
13

A financial analyst, assesses the likelihood of various possible future values of a stock price, assigns the following probabili

ty values to the predicted future price of the stock:
Future price: $40 $50 $65
Probability: 0.5 0.3 0.2

What is the expected value of the future stock price?

a. 16
b. 48
c. 50
d. 33.3
e. 51.6
f. 40
Business
1 answer:
alina1380 [7]3 years ago
8 0

Answer:

b. 48

Explanation:

The computation of the expected value of the future stock price is as follows;

= Respective future price × respective probabilities

= $40 × 0.5 + $50 × 0.3 + $65 × 0.2

= $20 + $15 + $13

= $48

hence, the  expected value of the future stock price is $48

Therefore the correct option is b.

The same is relevant

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Answer:

The correct answer is c. firm-level demand

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A marketing plan should be as detailed, and therefore as complicated as possible. True False
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Answer:

False

Explanation:

It should be detailed, clear and straight to the point. It doesn't have to be anything complicated.

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2 years ago
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During the current month, Wacholz Company incurs the following manufacturing costs. (a) Purchased raw materials of $17,500 on ac
scoundrel [369]

Answer and Explanation:

The journal entries are shown below:

a. Raw material inventory $17,500

        To Account payable $17,500

(Being raw material inventory purchased on account)

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       To Employer payroll tax payable $9,100

(Being factory labor is recorded)

c.  Factory Overhead $16,170

        To Factory Utilities payable $3,500

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3 years ago
The current (year 0) price of the shares of Company XYZ is $50. There are 1 million shares outstanding. Next year (year 1)’s div
otez555 [7]

Answer:

1. The dividend per share in year 2 would be $2.16.

The dividend per share in year 3 would be $2.3328

2. The market value of the firm is $50 million

3. The value of the firm next year after the payout is $ 54

Explanation:

1. In order to calculate the dividend per share in year 2 and the dividend per share in year 3 we would have to make the following calculation:

dividend per share in year 2=dividend per share in year 1*(1+Growth Rate)

dividend per share in year 1=$2

Growth Rate=Retention Ratio * ROE

Growth Rate=40% * 20%

Growth Rate=8%

Therefore, dividend per share in year 2=$2*(1+8%)

dividend per share in year 2=$2.16

dividend per share in year 3=dividend per share in year 2*(1+Growth Rate)

dividend per share in year 3=$2.16(1´8%)

dividend per share in year 3=$2.3328

2. In order to calculate the current market value of the firm we would have to make the following calculation:

market value of the firm=Currect Share Price * Number of outstanding shares

According to the given data:

Currect Share Price=$50

Number of outstanding shares=1 million shares

market value of the firm=$50*1 million shares

market value of the firm=$50 million

3. In order to calculate the value of the firm next year after the payout we would have to calculate first the rate of return as follows:

value of the firm =dividend per share in year 1/rate  of return-growth rate

$50* Rate of Return - 4 = $2

Rate of Return = 6 / 50

Rate of Return =12%

Therefore, value of the firm next year after the payout=dividend per share in year 2/rate  of return-growth rate

value of the firm next year after the payout=$2.16/0.12-0.08

value of the firm next year after the payout=$ 54

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ELEN [110]

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