Based on the given states, their probability of occurrence, and the investment returns, the expected return would be 8.72%.
<h3>What is the expected return for this investment?</h3>
This can be found by the formula:
= ∑ (Probability of occurrence x Investment returns if state occurs)
Solving gives:
= (18% x 20%) + (42% x 16%) + (30% x 3%) + (10% x -25%)
= 3.60 + 6.72 + 0.90 - 2.50
= 8.72%
Question:
Find the expected value of the investment.
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Business is an important human activity that has allowed humans to survive better because it:
- allows people access to goods and services - thanks to business, people are able to trade goods that they have for goods that they want thereby ensuring that human needs and wants are satisfied
- is a source of income - engaging in business allows people to earn money that they can use to get things that they want either as employees or as owners.
For these two main reasons, we can conclude that business is important because the satisfaction of human needs and wants is paramount to the survival of our species.
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Answer:
$287.01
Explanation:
The 2 stage dividend discount model would be used to determine the current value of the stock.
first stage
Present value in year 1 = (1.6 x 1.16) / 1.071 = 1.73
Present value in year 2 = (1.6 x 1.16²) / 1.071² = 1.88
Present value in year 3 = (1.6 x 1.16³) / 1.071³ =2.03
Present value in year 4 = (1.6 x 1.16^4) / 1.071^4 = 2.20
second stage
[ (1.6 x 1.16^4) x (1.06) ] / (0.071 - 0.06) = 279.17
Value of the stock = 1.73 + 1.88 + 2.03 + 2.20 + 279.17 = $287.01
Answer:
they believe that independent opinion expressed by an independent auditor on such a financial statement is more reliable than financial statement not from such a source due to potential conflict of interest.
Explanation:
The financial statement audited by an independent CPA is more reliable than the ones audited by a non-independent CPA. This is so because of the statutory responsibilities of the independent CPA.
The non-independent CPA is under the control of the management but the independent CPA is not responsible to the management but the shareholders.
The correct definition for free cash flows to the firm is <u>D. EBITX (1-Tax) + Depreciation - Changes in working capital - Capital Expenditure</u>.
<h3>What is free cash flow?</h3>
Free cash flow (FCF) is the cash a company has after all the cash outflows for its operations and capital assets maintenance.
This implies that free cash flow is the available cash that a company has after making payments for its operating expenses and capital expenditures (Capital Expenditure).
A. EBITDAX (1-Tax) + Depreciation - Changes in working capital + Capital Expenditure
B. EBITDAX (1-Tax) - Depreciation - Changes in working capital - Capital Expenditure
C. EBITX (1-Tax) - Depreciation - Changes in working capital + Capital Expenditure
D. EBITX (1-Tax) + Depreciation - Changes in working capital - Capital Expenditure
Thus, the correct definition for free cash flows to the firm is <u>Option D</u>.
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