Answer:
Sid should buy the company
Explanation:
given data
dividend = $1.70 per share
constant rate = 5%
required return = 11%
growth rate increase = 6.5%
increasing the required return = 12%
solution
we get here intrinsic value of the company in both by use Gordon Growth Model that is here present value
PV = ( Do × (1 + g) ) ÷ (r - g) .......................1
here Do is current dividend and g is growth rate and r is required rate of return
so here put value in current case
PV = ( 1.7 × (1 + 0.05) ) ÷ (0.11 - 0.05)
solve it we get
PV = $29.75 .............................2
and
now put value for buying company case
so
PV = ( 1.7 × ( 1 + 0.065)) ÷ ( 0.12 - 0.065)
solve it we get
PV = $32.92 ..............................3
so Sid should go ahead buying the company
Answer:
Lesser and fell relative to other currencies
Explanation:
This phenomenon is usually termed "Currency depreciation" a fall in the value of a currency in a floating exchange rate system.
The depreciation in 2016 occurred due to factors such as monetary policy, political instability and high inflation.
Amazon's global revenue was 135.99 billion US dollars in 2016, comparing the foreign exchange value in local currencies at that time will give a lesser value now.
Answer:
Two(2) exemptions
Explanation:
The first exemption would be based on the fact that Ronald has health challenges while the second exemption would be on the basis of Ed's (his son) state of mental capability.
Answer:
The answer is: Following the expected value criterion the investor should choose indistinctively between the conservative or neutral alternatives.
Explanation:
The formula we use to calculate the expected return value of the different alternatives is:
ERV = ∑ (expected return x probability of occurrence)
The conservative alternative has an expected return value of of 4.5%
ERV Conservative = (6% x 25%) + (4% x 75%) = 4.5%
The neutral alternative also has an expected return value of of 4.5%
ERV Neutral = (12% x 25%) + (4% x 75%) = 4.5%
The aggressive alternative has an expected return value of of -1%
ERV Aggressive = (20% x 25%) + (-8% x 75%) = -1%
Complete Question:
A 60-year old retiree is in a very low tax bracket. He has a low risk tolerance and wishes to make an investment that will provide income. Which is the BEST recommendation?
Group of answer choices.
A. Mid-cap common stock
B. Municipal bond
C. Bank CD
D. Treasure STRIPS
Answer:
C. Bank CD
Explanation:
In this scenario, a 60-year old retiree is in a very low tax bracket. He has a low risk tolerance and wishes to make an investment that will provide income. A Bank certificate of deposit (CD) is the best recommendation.
A bank certificate of deposit (CD) can be defined as a secured form of time-bound deposit and a special low-risk savings account, wherein money (lump-sum) are left with the bank for a specific period of time in exchange for an interest rate premium.
Generally, a certificate of deposit pays a higher interest rate to its holder than the regular savings account because the banks invest the money in a business.
<em>Additionally, the bank certificate of deposit is protected and insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.</em>
