Answer:
Current value per share is $13.33
Explanation:
The two stage growth model of DDM can be used to calculate the price of the share today. The DDM values a stock based on the present value of the expected future dividends from the stock. The price of this stock under this model can be calculated as follows,
P0 = D0 * (1+g1) / (1+r) + [ (D0 * (1+g1) * (1+g2) / (r - g2)) / (1+r) ]
Where,
- g1 is the initial growth rate which is 20%
- g2 is the constant growth rate which is 5%
- r is the required rate of return
P0 = 1 * (1+0.2) / (1+0.14) + [ (1 * (1+0.2) * (1+0.05) / (0.14 - 0.05)) / (1+0.14) ]
P0 = $13.33
Answer and Explanation:
The computation is shown below;
The Variable cost is
= 55% of $4
=$2.2
Now
Contribution margin per unit
= Sale - Variable cost
= $4 - $2.2
= $1.8 per unit
a.Breakeven point is
= Fixed cost ÷ Contribution margin
In units
= ($702,000 ÷ $1.8)
= 390,000 units
in dollars = (390,000 × $4)
= $1,560,000
b.Margin of safety = Total sales - Breakeven sales
In dollars = ($2,000,000 - $1,560,000)
= $440,000
Margin of safety ratio =Margin of safety ÷ Total sales
= ($440,000 ÷ $2,000,000)
= 22%
I would say first the Online Bank which has very low personnel costs could offer the highest interest rates, probably followed by the credit union in which members are all shareholders so they should receive preferential treatment, and finally the Traditional Banks which most likely have a higher overhead than the other two so the result would be lower interest rates on savings accounts to the customer.
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Future value= 5,000*4= $20,000
i= 8%
number of years= 5 years
To calculate the present value of the investment, we need to use the following formula:
PV= FV/ (1+i)^n
PV= 20,000/ (1.08^5)
PV= $13,611.664
