Answer:
The correct answer is $2.43.
Explanation:
The annual dividend is $1.90.
The expected rate of return is 12%.
The growth rate is 3.5%.
The current stock price will be
=
=
=
=$22.35
The stock price at year 3 will be
=
=
=
=$24.78
The capital gain will be
=stock price at year 3-current stock price
=$24.78-$22.35
=$2.43
Answer:
The maximum utility is 16 utils
Explanation:
To maximize the utility we must choose the items that gave most utils.
Each item cost $1 and we have $4 to spend.
1 slice of pizza: 5 utils
2 slice of pizza: 4 utils
3 slice of pizza: 3 utils
1 soda: 4 utils
2 soda: 3 utils
3 soda: 2 utils
If we display them in a decrease order and we choose the first four rows.
1 slice of pizza: 5 utils (1 dollar)
2 slice of pizza: 4 utils (1 dollar)
1 soda: 4 utils (1 dollar)
3 slice of pizza: 3 utils (1 dollar)
2 soda: 3 utils
3 soda: 2 utils
Highlighted are the ones we must get to get the maximum utility.
The maximum utility is 5 utils +4 utils+4 utils+3 utils= 16 utils
Answer: False
Explanation:
These are financial assets that has existing market invariably there prices are determined by market forces.
Discounting flows refers to project that are to produce inflows into the future the discount helps to determine the present value of the future inflows.
Answer: 9.48%
Explanation:
Given Data
Debts ;
$7 billion
$2 billion
$13 billion
Beta of Fords stock = Beta = 1.50
Market risk premium = Rp = 8.0%
Risk free rate of interest = Rf = 4.0%
Equity rate = 1.7
Market risk rate = 0.8
Risk free rate = 0.03
Therefore;
Cost of Equity ( Re ) = Risk free rate + equity rate × market risk premium
= 0.03 + (1.7 × 0.8)
= 0.166
Preferred Stock Cost ( PSC)= Dividend ÷ stock price
= 4 ÷ 30
= 0.1333
Total debt = 13 + 6 + 2 = 21 billion
D% = 13 billion ÷ 21 billion
= 0.619
E% = 6 billion ÷ 21 billion
= 0.286
P% = 2 billion ÷ 21 billion
= 0.095
RD = debt capital at 8% maturity rate
Tc= 30%
Rwac =(w/ preferred stock)
= Re × E% + PSC × P% + Rd ( 1- Tc) D%
Rwac = (0.166)(0.286) + (0.1333)(0.095) + (0.08)(1- 0.3)*(0.619)
= 0.094803 * 100
= 9.48%
At 30% tax rate Ford weighted average cost is 9.48%
Answer:
1. gain a higher market share.
2. inversely proportional to each other.
Explanation:
1. By producing a product at a lower price than the competitors a company will be at an advantage and will be providing same product at a lower price. The customer will definitely go with a low price item if two items are same in value.
2. As value creation requires cost so if the cost is reduced then some of the features will have to be foregone to achieve low cost.
