Answer:
Ans. The current price of the stock is $135.13
Explanation:
Hi, first, we need to find the price of the stock in year 9, since in year 10 is when the company starts to pay dividends. I know it could sound weird, but due the nature of the following formula, all future cash flows are brought 1 period before the first payment, in our case, if the first dividend is going to be paid in year 10, all the future cash flows of the share (future dividends) are going to be brought to year 9. The formula as follows.
Things should look like this
So the present Value (in year 9) is $228.31, but we need it in the present, therefore, we have to use another formula to bring this value to present value, given the required rate of return.
Where:
Return: The required rate of return (discount rate)
n: number of years from zero.
Everything shold look like this.
So the current price of this stock is $135.13.
Best of luck.
Answer: Option B
Explanation: In simple words, perfect competition refers to a market structure in which there are large numbers of buyers and sellers each operating at a minor level in the market. Due to high number of participants and low level of operations no firm can individually affect the price.
In such a structure the prices are determined by the market forces of demand and supply.
Hence the correct option is B .
Answer:
Your total lottery winnings are actually worth __$10,000____________ more than the same amount as less than $20,000 to you today.
Explanation:
My total worth today is $ 10,000
My present worth today is less than $20,000 by $10,000
Hence, the lottery amount is more than by amount X which is equal to the difference between $20,000 and My total worth in present times
$20,000 - $10,000 = $10,000
Answer:
C. Variable inflation is associated with high transaction costs
Explanation:
Because of uncertainty about future inflation, it may not uncertain relative to its price change. Therefore, option A is not correct.
In order to maximize financial position, inflation harms borrowers and helps lenders, so option B is also incorrect.
Option C is correct because variable inflation is associated with high transaction costs in order to maximize the financial position. For example, if the inflation rate is 5% during first quarter, the price level is not much to disrupt the financial position. Again, in the next quarter, if the inflation rate changes to 4%, the position will be effective more. However, if it increases, it will not affect too much.
An increase in the price of cappuccino will increase the quantity of cappuccinos demanded. False. When an item is in demand but not a drastic need for the item and you raise the price, the quantity sold will likely decrease. Since a coffee isn't a necessity when the price to purchase becomes too high for a consumer, the amount purchased will slowly drop off.
