Answer:
Explanation:
D0 = $1.88
D1 = 1.88*1.25 = $2.35
D2 = 2.35*1.25 = $2.94
D3 = 2.94*1.25 = $3.67
PV of Dividends:
r = 12%
1/(1.12) = 0.89
PV of D1 = 2.35/0.89 = $2.64
PV of D2 = 2.94/0.797 = $3.69
PV of D3 = 3.67/0.71 = $5.17
Total PV = $11.5
Value after year 3:
(D3*Growth rate)/(Required rate - growth rate) = $3.67*1.06/(0.12-0.06) = $64.8
Pv of 64.8 is 64.8/(1.12)^3 = $46.3
So, the maximum price per share is 11.5+46.3 = $57.8
Answer:
Fisher effect
Explanation:
Fisher effect is the effect in the economic theory that is established by the economist Irving Fisher, which states the relationship among the inflation and both nominal and the real interest rates.
This effect state that the real rate of interest equals to the nominal rate of interest deduct the expected inflation rate.
So, the relationship which is mentioned in the question is the fisher effect as it state the rate of interest that reflect the expectations likely the future inflation rates.
Answer:
$33,540,000
Explanation:
initial investment:
- opportunity cost of land (resale price of land) = $10,700,000
- building cost of the facilities = $21,900,000
- other expenses related to the site (grading) = $940,000
- total $33,540,000
The purchase cost of the land is considered a sunk costs, since it is not relevant now. What is relevant is the price at which the land could be sold at the moment of starting the project.
The property of marginal cost increasing as the quantity of output increases is known as diminishing marginal product.
<h3>What is
diminishing marginal product?</h3>
Diminishing marginal product states that says as more units of a variable input of production is added to a fixed factor of production, output might increase initially but after a point total output would increase at a decreasing rate and marginal product would begin to decrease.
To learn more about diminishing marginal product, please check: brainly.com/question/10511919
Answer:
B. the value placed on the last unit of production by buyers exceeds the cost of production
Explanation:
