Answer:
Option B, IRR is 14.42%
Explanation:
The IRR is the rate of return that equates the cost of the project to the present value of cash flows receivable from the project in future.
Using an excel approach, the formula formula IRR is given as:
=irr(values)
The values in this case are
-$1300 in year 0
$450 in year 1
$450 in year two
$450 in year 3
$450 in year 4
The irr gives 14.42% as shown in the spreadsheet attached
The cost of the investment of the investment project of $1300 equals the present values of its cash flows at 14.42% rate of return
Answer: B. Yes. Branding allows the mushrooms to be easily identified in the future. Thus, if they were of inferior quality, the company would lose customers and go out of business over time.
Explanation:
Branding is a way of making sure that your product is easily identifiable over other products.
When a company brands it's goods, they are trying to create Brand Awareness and this usually happens when a company plans to stay in a business for a while and indeed with the way the Firm is spending a lot of money on Advertising, one can surmise that they do indeed plan to stay in the business because they have spent a lot.
It would therefore make little to no sense on their part to spend such huge amounts of money to build their brand if their products will be of low quality. The mushrooms have to be of high quality so that people may associate their brand with High Quality.
Answer:
Do = $2.00
D1= Do(1+g)1 = $2(1+0.1)1 = $2.20
D2= Do(1+g)2 = $2(1+0.1)2 = $2.42
PHASE 1
V1 = D1/1+ke + D2/(1+ke)2
V1 = 2.20/(1+0.11) + 2.42/(1+0.11)2
V1 = $1.9820 + $1.9641
V1 = $3.9461
PHASE 2
V2 = DN(1+g)/ (Ke-g )(1+k e)n V2 = $2.42(1+0.03)/(0.11-0.03)(1+0.11)2
V2 = $2.4926/$0.0649
V2 = $38.4068
The current stock price is calculated as follows:
Po = V1 + V2
Po = $3.9461 + $38.4068
Po = $42.35
Explanation: This question relates to valuation of shares with 2-phase growth model. The value of shares in the first phase will be determined by discounting the dividend for the 2 years by cost of equity. The dividends for year 1 and year 2 were obtained by subjecting the current dividend paid (Do) to growth rate.
Moreso, the value of shares for the second phase was calculated by considering the last dividend paid(D2) and then subject it to the new growth rate. The adjusted dividend was then capitalized at the appropriate discount rate of the company.
Answer:
The correct answer is question mark.
Explanation:
Question mark products are also known as children's products. These products are positioned within the market with a lower growth rate than expected. Since growth is much lower than initially thought, the benefits are equally small. Companies that have one type of questioning product, are in need of making an investment after another in order to keep market shares at a healthy level always in order that these market shares are increasing with the passage of time until they no longer need extra money injections.
