Answer:
Cost of equity = 10.7%
Explanation:
<em>We will work out the required rate of return using the the dividend valuation model. The model states that the value of a stock is the present value of the future divided discounted at the cost of equity.
</em>
The model is given below:
P = D× (1+g)/(r-g)
P- price of stock, D- dividend payable now, g- growth rate in dividend, r- cost of equity
So we substitute
130 = 5.50× (1+r)/(r-0.06)
cross multiplying
(r-0.06)× 130 = 5.50 × (1+r)
130 r- 7.8 = 5.50 + 5.50r
collecting like terms
130 r - 5.50r=5.50 + 7.8
124.5 r= 13.3
Divide both sides by 124.5
r =13.3 /124.5= 0.1068
r=0.1068 × 100= 10.7%
Cost of equity = 10.7%
The cause of this lack of incentive to engage in economic activity is <u>the lack of legalized </u><u>property right</u><u>s</u>.
<h3>What are property rights?</h3>
Property rights establish the resources ownership and control. Generally, legalizing property rights recognize the the rights of:
- Possession
- Control
- Exclusion
- To derive income
- Disposition.
Thus, having official records indicating agricultural property rights will encourage Europeans to engage in economic and agricultural activities.
Learn more about legalizing property rights at brainly.com/question/913138
Answer:
The answer is: You should invest in Project B since it has a higher NPV ($12.65) than Project A ($12.04)
Explanation:
Using an excel spreadsheet we can determine the net present value (NPV function) of the cash flows associated with each project.
<u>Project A</u> <u>Project B</u>
40 30
50 30
60 30
0 30
discount rate for both projects = 15%
NPV Project A's cash flows = $112.04 minus the amount invested (100) = $12.04
NPV Project B's cash flows = $85.65 minus the amount invested (73) = $12.65
Patronage principle based its hiring and promotion system on political reasons while the merit principle employed the idea that hiring should be based on entrance examination and promotion. One of the major disadvantage of the patronage principle is that, it may end up employing people who are not qualify for the job. Merit principle choose based on qualifications.
Answer:
c. Switching to robot-assisted assembly methods to lower depreciation costs at the production facility.
Explanation:
The correct answer is c. Switching to robot-assisted assembly methods to lower depreciation costs at the production facility will not help reduce the production or marketing cost of the company. The depreciation is not included in the production cost and an administrative overhead. This will not reduce the production cost per action-capture camera sold.
