Answer:
a. Current price = $43.99
b. We have:
Price in four years = $52.03
Price in sixteen years = $101.76
Explanation:
a. What is the current price?
Using the Gordon Growth Model formula, we have:
Current price = (Dividend just paid * (100% + Dividend growth rate)) / (Rate of return – Dividend growth rate) = ($2.60 * (100% + 5.75%)) / (12% - 5.75%) = $43.99
b. What will the price be in four years and in sixteen years?
Using the Gordon Growth Model formula with an adjustment for number of years, we have:
Price in four years = (Dividend just paid * (100% + Dividend growth rate)^Number of years) / (Rate of return – Dividend growth rate) = ($2.60 * (100% + 5.75%)^4) / (12% - 5.75%) = $52.03
Price in sixteen years = (Dividend just paid * (100% + Dividend growth rate)^Number of years) / (Rate of return – Dividend growth rate) = ($2.60 * (100% + 5.75%)^16) / (12% - 5.75%) = $101.76
Answer:
The contribution margin per unit for the 18-inch blade.
Break even in units = Fixed cost/Contribution per unit
= 85,000/11 (15-4)
= 7,728 unit (round off)
The contribution margin ratio of the 18-inch blade.
Total contribution margin (CM) is calculated by subtracting total variable costs TVC from total sales TSP. Contribution margin per unit equals sales price per unit SP minus variable costs per unit VC . It is used in calculating a break even point of a business. Contribution margin ratio tells us how much contribution towards fixed cost is generate by selling a unit.
CM ratio = $ 11/ $ 15 *100= 73.33%
(Variable cost = 15 -4 = 11 )
Contribution margin income statement for the month of January.
Sales $ 180,000
Variable cost ($ 48,000)
Gross profit $ 132,000
Fixed Cost ($ 85,000)
Net Profit $ 47,000
Answer:
The correct answer is False, this is an example of active asset allocation with passive security selection.
Explanation:
An asset allocation is defined as the decisions handled by a portfolio manager where combinations and weights are related to the assets in an investment portfolio. These actions are applied considering the risk associated with the investor, in order to anticipate the potential returns of the investment portfolio.
Answer:
Interest due on the first loan repayment= $7
Explanation:
Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.
The monthly periodic equal instalment is $62.05 which consists of the principal and the interest due.
To ascertain the interest portion of the loan , we will compute the interest due for the first month using the annual interest rate and the principal amount.
Interest due for the first month = 6.0%× 1,400 × 1/12 = $7
Interest due on the first loan repayment= $7
