Answer:
D1 = $1.12
D2 = $1.25
D3 = $1.40
D4 = $1.48
D5 = $1.55
Explanation:
The formula to calculate dividends for next years is:
Where D_n is successive year dividend
D_(n-1) is previous year dividend
g is the growth rate (given as 12% = 12/100 = 0.12)
Initial dividend is $1, D_0
So, lets calculate the dividends for 5 years:
Year 1:
D1 = 1(1+0.12) = 1(1.12) = $1.12
Year 2:
D2 = D1(1+g) = 1.12(1.12) = 1.2544 = $1.2544
Year 3:
D3 = D2(1+g) = 1.2544(1.12) = 1.404928 = $1.404928
Year 4:
D4 = D3(1+g) = 1.404928(1+0.05)1.404924(1.05) = $1.4751744
Year 5:
D5 = D4(1+g) = 1.4751744(1.05) = $1.54893312
A corporation may be valued above other forms of business ownership by the fact that large amounts of capital could be raised by selling stock in the corporation.
<h3 /><h3>Advantages of selling stock</h3>
When a company decides to sell its shares on the market, it guarantees the raising of short-term capital that helps in its growth and expansion strategy, since there is an inflow of funds from the market.
Therefore, through the stock market, a company can satisfy its financial needs by attracting additional investors, avoiding debt and sharing the responsibilities of the business.
Find out more information about stock market here:
brainly.com/question/25821437
Answer:
The Net Present Value (NPV) of this project is <u>$93,405.59</u>.
Explanation:
Note: Find attached the excel file for the calculation of the NPV of this project.
Net present value (NPV) refers to the present value of cash inflows minus the present value of cash outflows over a specified period of time.
On its own, present value (PV) refers the value that a future sum of money or stream of cash flows has now or currently given a specified rate of return. The formula for calculating the PV is given as follows:
PV = FV / (1 + r)^n
Where,
FV = Future value
r = discount rate. This is given as 10% in this question
n = Relevant period, e.g. year
The above explanation and formula together with other stated formulae in the attached excel file is used in calculating the NPV of this project.
Answer:
opportunity cost = 30,000
Explanation:
The opportunity cost is the return in the alternative investment:
250,000 x 12% = 30,000 opportunity cost
The economic profit would be the lease less the opportunity cost
35,000 - 30,000 = 5,000 economic profit
<u>Note: If there was two or more alternatives, </u>we should pick the investment with the highest yield.
As a rule of thumb, an entrepreneuer should reevaluate her compensation package yearly. It's worthwhile to reevaluate because you may need to make changes to your plan if you are making more or less money. As your business grows, as an entreprenuer you are able to take a larger cut of your money or reinvest it elsewhere.
