The investment demand slopes downward and to the right because lower real interest rates Multiple Choice expand consumer borrowi
1 answer:
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Answer:
8.95%
Explanation:
Data provided in the question:
Time, n = 29 years
Principle amount = $200,000
Future value = $2,400,000
Now,
Using the compounding formula
Future value = Principle × [ 1 + r ]ⁿ
here,
r is the interest rate
Thus,
$2,400,000 = $200,000 × [ 1 + r ]²⁹
or
[ 1 + r ]²⁹ = 12
taking the natural log both the sides, we have
29 × ln(1 + r) = ln(12)
or
ln(1 + r) = 0.08569
or
1 + r =
or
1 + r = 1.0895
or
r = 0.0895
or
r = 0.0895 × 100% = 8.95%
Answer:
Current price of the share common stock will be $30
So option (c) will be correct answer
Explanation:
We have given expected dividend
Required rate of return = 15 % = 0.15
Tax rate = 30 %
Growth rate = 5 %
Beta = 2
We have to find the price of the share
Price of the share is given by
So current price of the share stock will be equal to $30
So option (C) will be correct answer