Based on the given information, the California court ordered Wang's website shut down because he was doing business in California. So, the correct option is A.
The court's decision in the Gucci vs. Wang case would most likely be that the California court found in favor of Gucci because Wang did not respond to the lawsuit and remained in China.
The court may have determined that Wang was making money by selling fake Gucci products and using the Gucci name without permission. Therefore, it is possible that the court ordered Wang's website to be shut down because he was conducting business in California. Hence, the correct option is A.
To know more about court refer here:
https://brainly.com/question/13375489#
#SPJ11
Suppose total reserve=20, MC=20, MB=10-20Q. In a two-period model, which of the following (q1,q2) can possibly be the extractions on the optimal path? (Suppose r>0)
A (q1=20,q2=20)
B (q1=25,q2=15)
C (q1=21,q2=19)
D (q1=19,q2=21)
E (q1=15,q2=25)
F (q1=21,q2=18)
The extractions on the optimal path can possibly be (A) (q1=20, q2=20) and (D) (q1=19, q2=21).
In a two-period model, the optimal extraction path is determined by comparing the marginal cost (MC) and the marginal benefit (MB) of extraction. The marginal benefit is given by MB = 10 - 20Q, where Q represents the cumulative extraction up to that period. The total reserve is 20 units.
For option A (q1=20, q2=20), the total extraction over the two periods is 40 units, exceeding the total reserve. Therefore, this option is not feasible.
For option B (q1=25, q2=15), the total extraction over the two periods is 40 units, which again exceeds the total reserve. Thus, this option is also not feasible.
Option C (q1=21, q2=19) has a total extraction of 40 units, which is equal to the total reserve. Hence, this option is a possibility.
Option D (q1=19, q2=21) has a total extraction of 40 units, equal to the total reserve. Therefore, this option is a possibility as well.
For option E (q1=15, q2=25), the total extraction is 40 units, exceeding the total reserve. Hence, this option is not feasible.
Option F (q1=21, q2=18) has a total extraction of 39 units, which is less than the total reserve. Therefore, this option is not feasible.
To summarize, the possible extractions on the optimal path are (q1=20, q2=20) and (q1=19, q2=21).
The explanation lies in the comparison of the marginal cost and the marginal benefit of extraction. The marginal cost (MC) is not explicitly given in the question, but it represents the cost of extracting one unit. The marginal benefit (MB) decreases as extraction increases, following the equation MB = 10 - 20Q.
For the total extraction to be optimal, the marginal cost should equal the marginal benefit in each period. In this case, the marginal cost is not provided, so we cannot determine the exact values of q1 and q2. However, we can analyze the given options based on the total extraction over the two periods.
Options A and B both exceed the total reserve, indicating over-extraction. Option E also exceeds the total reserve. Option F falls short of the total reserve, indicating under-extraction.
Options C and D have a total extraction equal to the total reserve, making them potential candidates for the optimal path. However, without information about the marginal cost, we cannot definitively determine the optimal extraction path.
To learn more about marginal cost, click here:
brainly.com/question/14923834
#SPJ11
pls
help asap
What is the effective annual rate of interest if $1100.00 grows to $1400.00 in five years compounded monthly? The effective annual rate of interest as a percent is %. (Round the final answer to four d
The effective annual rate of interest is 0.545%. Given data are,
The amount borrowed or invested is $1100.00.
The amount after the 5-year term is $1400.00.
It is compounded monthly, thus, the number of compounding periods in a year is 12.
We are to find the effective annual rate of interest.
Using the compound interest formula: A=P(1+r/n)^(nt), where
A is the final amount,
P is the principal or initial investment,
r is the annual interest rate,
n is the number of compounding periods in a year, and
t is the time in years.
Therefore,
1400 = 1100(1 + r/12)^(5 * 12)
Here, the main answer is: $8.7646
We simplify:
1.27272727 = (1 + r/12)^60
Using logarithmic functions, we get:
ln(1.27272727) = ln[(1 + r/12)^60]
Thus,60 ln(1 + r/12) = ln(1.27272727)
Therefore,
ln(1 + r/12) = 0.000454T
he effective annual rate is:
r = 12 [e^0.000454 – 1]
r = 12 [0.000454 + 0.000000103 + …]
r ≈ 0.00545, or 0.545%
Learn more about compound interest: https://brainly.com/question/14295570
#SPJ11
government and not-for- profit accounting concepts and practices by granof, khumawala, calabrese and smith - john wiley & sons (9th edition)
Government and not-for-profit accounting is a specialized field that focuses on the accounting principles and practices applicable to governmental organizations and non-profit entities.
These entities have unique characteristics and reporting requirements that differ from for-profit organizations. Some key concepts and practices in government and not-for-profit accounting include:
1. Fund Accounting: Government and not-for-profit organizations typically use fund accounting, which involves segregating financial resources based on their specific purposes or restrictions. This allows for better tracking and reporting of resources for different programs or projects.
2. Budgeting and Appropriations: Governments and not-for-profit organizations operate on budgets and often receive appropriations or grants from external sources. It is important to track and report on the utilization of these resources in accordance with budgetary and legal requirements.
3. Revenue Recognition: Government and not-for-profit entities receive revenue from various sources, such as taxes, fees, grants, and donations. Proper recognition and accounting for these revenue sources is crucial to ensure accurate financial reporting.
4. Financial Reporting: Government and not-for-profit organizations are required to prepare financial statements that provide information on their financial position, activities, and cash flows. These financial reports often include a Statement of Net Position, Statement of Activities, and Statement of Cash Flows, among others.
It is recommended to refer to the book you mentioned or consult other reliable sources for a more comprehensive understanding of the subject matter.
Learn more about Cash flows:
brainly.com/question/24179665
#SPJ11
When a company recognizes the portion of supplies used during a year, the effect is a decrease in net income. true/false
True. When a company recognizes the portion of supplies used during a year, it results in a decrease in net income.
The recognition of the portion of supplies used during a year is typically accounted for as an expense called "supplies expense" or "cost of goods sold" depending on the nature of the supplies. By recognizing this expense, the company reflects the consumption of supplies as part of its operational activities.
Since expenses are deducted from revenues to calculate net income, the recognition of supplies used reduces the overall net income of the company. This decrease in net income is due to the fact that the supplies expense is subtracted from the company's total revenue, resulting in a lower profit or net income figure.
By recognizing the portion of supplies used, the company accurately reflects the cost of the supplies consumed in its financial statements, providing a more accurate representation of its profitability and financial performance.
To learn more about company click here brainly.com/question/30532251
#SPJ11
True. When a company recognizes the portion of supplies used during a year, it results in a decrease in net income.
The recognition of the portion of supplies used during a year is typically accounted for as an expense called "supplies expense" or "cost of goods sold" depending on the nature of the supplies. By recognizing this expense, the company reflects the consumption of supplies as part of its operational activities.
Since expenses are deducted from revenues to calculate net income, the recognition of supplies used reduces the overall net income of the company. This decrease in net income is due to the fact that the supplies expense is subtracted from the company's total revenue, resulting in a lower profit or net income figure.
By recognizing the portion of supplies used, the company accurately reflects the cost of the supplies consumed in its financial statements, providing a more accurate representation of its profitability and financial performance.
To learn more about company click here brainly.com/question/30532251
#SPJ11
2. (8 pts) Find the rate of simple interest if interest of $500 is paid on a $5,000 loan in 4 years.
Given that interest paid is $500 and the principle amount is $5000 and the time period is 4 years.Now, we can find the rate of simple interest using the formula for simple interest.Simple Interest Formula Simple Interest = (P × R × T)/100
Where,P = Principal Amount R = Rate of Interest T = Time Let's substitute the given values and find the rate of interest.Rate of Simple Interest Calculation Simple Interest = (P × R × T)/100500 = (5000 × R × 4)/100 Simplifying the above equation, we get 20R = 500 Dividing by 20 on both sides;R = $25 Hence, the rate of simple interest is 25%.Therefore, the required rate of simple interest is 25%.
To know more about principle
visit https://brainly.com/question/33246486
#SPJ11
3. The prices in the stock market are driven by____________.
A. the respective companies
B. supply and demand
C. the government
D. Follow-up Offerings (FPO)
Correct option is B. The prices in the stock market are driven by supply and demand. The stock market refers to a collection of markets and exchanges where activities such as stock trading, issuance, and other activities related to stocks take place.
As per the definition, the stock market is a place where people buy and sell shares of public companies. A stock is a share in the ownership of a company, so if an individual purchases a stock, they essentially become a partial owner of the company.The stock market can be affected by various factors such as political changes, economic events, natural disasters, and social instability.
However, the most significant driving force behind the stock market is supply and demand.When there is high demand for a particular stock, its price rises, and when the demand is low, the price falls. Similarly, when the supply of a stock is high, the price falls, and when the supply is low, the price rises. Thus, the forces of supply and demand drive the prices in the stock market.
To know more about Stock market visit-
brainly.com/question/7550583
#SPJ11
Project \( L \) requires an initial outay at \( t=0 \) of \( \$ 52,000 \), its expected cash inflows are \( \$ 11,000 \) per year for 10 years, and its WACC is \( 11 \% \). What is the project's payback?
The payback period of the project is that the project will have a payback period of 4.73 years, and the Explanation for this is that we can calculate the payback period of a project as the period it takes for the initial investment to be repaid out of the cash inflows generated by the project.
What is payback period?Payback period is a capital budgeting technique that calculates the time it will take for a company to recover its initial investment. The payback period can also be used to measure the time it takes to recover the cash outflows invested in a project. This technique is an easy way to determine how long it will take to recoup the money spent on the investment.
It is calculated by dividing the initial investment by the expected annual cash inflow. In this problem, the project has an initial outlay of $52,000, with expected cash inflows of $11,000 for 10 years. So, the payback period can be calculated as:
Payback period = Initial investment / Annual cash inflow
Payback period = $52,000 / $11,000
Payback period = 4.73 years
Therefore, the project will have a payback period of 4.73 years.
Learn more about the expected annual cash inflow: https://brainly.com/question/31086720
#SPJ11
Imagine that confidential information stored on your employer's servers is compromised in a data breach. This information contains customer identities, addresses, and financial information, as well as similar kinds of information on company business plans, pending patents, and intellectual property. Finally, the stolen information contains the confidential records for employment (ie, names, addresses, social security numbers, and so on). Do you think you know what to do, both as a person and as a company? How should a company in this position respond, and what do appropriate counter-measures and plans look like?"
As an individual, if you discover a data breach, immediately report it to your employer's IT or security team.
As a company, respond by conducting a thorough investigation, notifying affected individuals, offering assistance, implementing stronger security measures, and cooperating with authorities.
Appropriate counter-measures include encryption, access controls, regular security audits, employee training, and incident response plans. Plans should focus on prevention, detection, containment, and recovery.
In the event of a data breach involving confidential information, both individuals and companies need to take appropriate actions. As an individual, if you become aware of a data breach, it is crucial to promptly report the incident to your employer's IT or security team. This immediate action allows the company to initiate their incident response procedures promptly.
From the company's perspective, a comprehensive response is essential. The first step is to conduct a thorough investigation to determine the extent of the breach, the information compromised, and the cause of the breach. This investigation will provide valuable insights to guide subsequent actions.
Once the investigation is complete, the affected individuals should be notified promptly. Clear and concise communication is vital to inform customers about the breach, what information was compromised, and any potential risks they may face. Additionally, offering assistance, such as credit monitoring services or identity theft protection, can help mitigate the impact on affected individuals.
To prevent future breaches, the company should implement stronger security measures. These may include encryption of sensitive data, robust access controls to limit unauthorized access, regular security audits to identify vulnerabilities, and comprehensive employee training on security best practices.
Furthermore, a well-defined incident response plan is crucial. This plan should outline the steps to be taken during a breach, including prevention, detection, containment, and recovery strategies. Regular testing and updating of the plan ensure its effectiveness and readiness.
In summary, both individuals and companies need to act swiftly in the event of a data breach. Companies should respond by conducting investigations, notifying affected individuals, offering assistance, implementing stronger security measures, and cooperating with authorities. Effective counter-measures involve encryption, access controls, regular security audits, employee training, and well-defined incident response plans.
Learn more about Customer here:
https://brainly.com/question/31192428
#SPJ11
After watching the video, please answer the questions listed below.
https://www.ted.com/talks/joseph_pine_what_consumers_want#t-663291
Explain the significance of the progression of economic value. Walk through the progression from Commodities, to Services, to Goods, to Experience. Identify the Business Imperative and Consumer sensitivity for each.
What is mass marketing? Explain why this model of marketing is not as effective as it was in years past.
Why do people value connectivity? Describe the benefits of connectivity to a business.
According to Joseph Pine say about authenticity?
How will the concepts presented in this video affect consumer preferences in the future?
The progression of economic value refers to how consumers perceive and appreciate the value of goods and services. The progression includes four stages, which are Commodities, Services, Goods, and Experience.
What does these stages represent? These stages represent different levels of value creation, which businesses can use to differentiate their offerings and create competitive advantage.
Commodities: Commodities refer to basic raw materials, such as oil, copper, or wheat. The Business Imperative for commodities is to produce them at the lowest cost possible, while the Consumer sensitivity is mainly on the price.
Services: Services refer to intangible activities that are performed to enhance a product or to provide a solution to a problem. The Business Imperative for services is to create a service that delivers a valuable solution that is both efficient and effective, while the Consumer sensitivity is mostly on the quality of service.
Goods: Goods refer to physical products that have tangible attributes, such as a car or a smartphone. The Business Imperative for goods is to create a product that is of high quality, durable, and can satisfy the needs of the customer, while the Consumer sensitivity is usually on the design, functionality and convenience.
Experience: Experience refers to how customers perceive a product or service based on their interaction with it. The Business Imperative for experience is to create a memorable, engaging, and unique experience that is differentiated from competitors, while the Consumer sensitivity is mostly on the emotional impact of the experience.
Mass marketing is a marketing strategy where businesses create a single marketing campaign to appeal to a large audience.
This model of marketing is not as effective as it was in years past because customers are now more diverse and have different needs and wants.
Mass marketing fails to address the specific needs of individual customers, and it is often seen as intrusive and irrelevant.
According to Joseph Pine say about authenticity?
According to Joseph Pine, authenticity is a crucial element of the experience economy.
The concepts presented in this video are likely to affect consumer preferences in the future by placing a greater emphasis on experiences and authenticity.
They will also value authenticity and transparency from businesses, and they will be more likely to support businesses that are honest and genuine in their interactions.
To know more on Business visit:
https://brainly.com/question/15826679
#SPJ11
e. Comparing the equilibrium before the recession with the new long-run (period six) equilibrium, how much does inflation change? How many percentage points of output are lost during the transition? What is this economy's sacrifice ratio? Inflation decreases by The sacrifice ratio equals percentage points. percentage points of output are lost. Aggregate Supply - Work It Out An economy has the given equation for the Phillips curve: T= En -0.75(u - 5) People form expectations of inflation by taking a weighted average of the previous two years of inflation: Eπ = 0.6-1 +0.47-2 Okun's law for this economy is: Y-Y_1 Y_1 The economy begins at its natural rate of unemployment with a stable inflation rate of 8 percent. = 2.0 - 2.5(u-u-1) e. Comparing the equilibrium before the recession with the new long-run (period six) equilibrium, how much does inflation change? How many percentage points of output are lost during the transition? What is this economy's sacrifice ratio? Inflation decreases by The sacrifice ratio equals percentage points. percentage points of output are lost.
In the given scenario, the economy experiences a decrease of 4 percentage points in inflation, a loss of 5 percentage points in output, and has a sacrifice ratio of 1.25.
Here are the steps involved in computing the change in inflation, output loss, and sacrifice ratio for an economy that experiences a recession:
1. Compute the change in inflation. The change in inflation is calculated by subtracting the inflation rate before the recession from the inflation rate after the recession.
2. Compute the output loss. The output loss is calculated by subtracting the output level after the recession from the output level before the recession.
3. Compute the sacrifice ratio. The sacrifice ratio is calculated by dividing the output loss by the change in inflation.
Here are the specific calculations for the economy in your question:
Change in inflation: The inflation rate before the recession is 8%. The inflation rate after the recession is 4%. Therefore, the change in inflation is 8% - 4% = 4%.Output loss: The output level after the recession is 95% of the output level before the recession. Therefore, the output loss is 5%.Sacrifice ratio: The sacrifice ratio is 5% / 4% = 1.25.In this case, the economy's inflation decreases by 4 percentage points. The economy's output loss is 5 percentage points. The economy's sacrifice ratio is 1.25.
It is important to note that the sacrifice ratio is not a fixed number. It can vary depending on the severity of the recession and the monetary policy used to bring inflation under control.
To learn more about recession
https://brainly.com/question/29546668
#SPJ4
Please pricing default-able bonds with 2 years, face value (F) of $1,000,000, firm value (V) of 1,200,000. The firm value’s volatility rate is 10% and risk-free rate is 5%. (1) the value of default-able bond; (2) the quasi debt-to-value ratio; (3) the probability of defaulting for the firm of debt issuing
The default-able bond's value can be calculated using the firm's value, face value, volatility rate, and risk-free rate. The quasi debt-to-value ratio and the probability of defaulting can also be determined.
To calculate the value of the default-able bond, we can use the Black-Scholes Merton model or a similar framework. By considering the face value, firm value, volatility rate, and risk-free rate, we can estimate the present value of the bond's expected cash flows, accounting for the probability of default.
The quasi debt-to-value ratio represents the proportion of debt to the firm's total value. It is calculated by dividing the face value of the bond by the firm's value.
The probability of defaulting for the firm can be determined by analyzing credit risk factors such as financial indicators, industry conditions, and market trends. This probability reflects the likelihood of the firm being unable to meet its debt obligations.
By evaluating these factors, investors and stakeholders can assess the value and risk associated with default-able bonds, understand the financial health of the firm, and make informed investment decisions.
Learn more about Debt ratio click here :brainly.com/question/11042341
#SPJ11
Good afternoon, can you help me with a VISION of an online
company that distributes streaming accounts (Netflix, disney, hbo
max, etc) that is a minimum of 80 words.
Good afternoon! Sure, here's a vision statement for an online company that distributes streaming accounts:
"Our vision is to be the premier online destination for hassle-free access to a wide range of streaming accounts. Streaming accounts refer to accounts that allow users to access streaming services for video, music, or other types of media content. These services typically require a paid subscription to access their content libraries. We aim to revolutionize the way people enjoy their favorite movies, TV shows, and exclusive content by providing a seamless and convenient platform. Through our curated selection of popular streaming services like Netflix, Disney+, HBO Max, and more, we strive to enhance entertainment experiences worldwide. With a focus on affordability, reliability, and user satisfaction, we aim to be the go-to destination for individuals and families seeking unparalleled entertainment options. Our vision is to bring joy, convenience, and endless entertainment possibilities to our valued customers, anytime and anywhere."
To know more about streaming accounts, visit
https://brainly.com/question/28609722
#SPJ11
Using the existing functional organization to administer and complete projects has?
Using the existing functional organization to administer and complete projects can leverage specialized expertise, clear roles, and efficient resource allocation. However, it may also lead to communication challenges, lack of flexibility, silo mentality, and slow decision-making.
Using the existing functional organization to administer and complete projects has both advantages and disadvantages. Let's explore them below:
Advantages:
1. Specialized expertise: Functional organizations are structured based on specialized departments, which means that employees have expertise in their respective fields. This expertise can be utilized effectively in project execution.
2. Clear roles and responsibilities: Functional organizations have clearly defined roles and responsibilities, making it easier to assign tasks and track progress during project implementation.
3. Efficient resource allocation: Functional organizations have established resource pools, allowing for efficient allocation of resources to projects as needed.
4. Standardized processes: Functional organizations often have well-established processes and procedures, which can help in streamlining project execution and ensuring consistency.
Disadvantages:
1. Communication challenges: Functional organizations can experience communication challenges between different departments, leading to coordination issues during project implementation.
2. Lack of flexibility: Projects often require flexibility in terms of resource allocation and decision-making, which may be hindered by the rigid structure of functional organizations.
3. Silo mentality: Functional organizations may foster a silo mentality, where departments prioritize their own objectives over the success of the project as a whole.
4. Slow decision-making: In functional organizations, decision-making can be slow due to multiple levels of hierarchy and the need for approvals from various departments.
Learn more about organization
https://brainly.com/question/12825206
#SPJ11
a) Explain what the FIVE (5) objectives of a Central Bank ? b) Using T-account, describe how banks create money? c) If a Central Bank wanted to use all three of its policy tools to decrease the money supply. explain what it would do? QUESTION 2 a) A farmer grows oil palm, which he sells the fruits to a miller for RM100. The miller turns the fruits into oil, which he sells to a soap manufacturer for RM150. The soap manufacturer turns the palm oil, into soap, which he sells to consumers for RM180. Consumers use soap. i. ii. iii. What is the GDP of this economy? Explain Value added is defined as the value of a producer's output minus the value of the intermediate goods that the producer buys. Assuming there are no intermediate goods beyond those described above, calculate the value-added for each of the three producers. What is the total value added by the three producers in this economy?
Previous question
a) The five objectives of a Central Bank include maintaining price stability, promoting full employment, fostering economic growth, ensuring financial stability, and conducting monetary policy effectively.
b) Banks create money through the process of lending and deposit creation. When a bank makes a loan, it credits the borrower's account with new deposits, effectively creating money.
c) To decrease money supply, a Central Bank can use its policy tools.
a) The objectives of a Central Bank are as follows:
1. Maintaining Price Stability: Central Banks aim to control inflation and ensure stable prices in the economy.
2. Promoting Full Employment: Central Banks work towards achieving a low unemployment rate and fostering job creation.
3. Fostering Economic Growth: Central Banks support sustainable economic growth by implementing policies that stimulate investment and productivity.
4. Ensuring Financial Stability: Central Banks oversee the stability of the financial system, monitor risks, and take measures to prevent crises.
5. Conducting Monetary Policy Effectively: Central Banks use monetary policy tools to regulate money supply, interest rates, and credit availability to achieve their objectives.
b) This is represented in a T-account as follows: The bank's assets increase by the loan amount, while its liabilities (deposits) also increase by the same amount.
c) To decrease the money supply, a Central Bank can utilize its policy tools in the following ways:
1. Open Market Operations: The Central Bank can sell government securities, such as Treasury bonds, to commercial banks and the public.
2. Reserve Requirements: By increasing the reserve requirements for banks, limiting their ability to lend and decreasing the money supply.
3. Policy Interest Rate: The Central Bank can raise its policy interest rate, making borrowing more expensive for banks and individuals.
Learn more about Financial here:
https://brainly.com/question/30620783
#SPJ11
Please provide a DETAILED and CLEAR response to the question below WITHOUT PLAGARISING:
Some commentators have suggested that a tax on business per tonne of carbon they emit is a better way of reducing carbon emissions than a permit or emissions trading system. What would be the reasons for preferring one approach over the other?
A carbon tax provides a direct cost on emissions, while a permit or trading system offers flexibility and market-based incentives.
When considering the choice between a tax on business per tonne of carbon emissions and a permit or emissions trading system, several factors come into play. Both approaches aim to reduce carbon emissions, but they differ in their mechanisms and potential outcomes.
A tax on business per tonne of carbon emissions, also known as a carbon tax, imposes a direct cost on emitters based on the amount of carbon they release into the atmosphere. This approach provides a clear price signal, encouraging businesses to reduce their emissions to minimize costs. It is relatively simple to implement, requiring a straightforward tax calculation based on emissions data. Additionally, a carbon tax offers revenue generation possibilities, which can be used to fund environmental initiatives or provide incentives for cleaner technologies.
On the other hand, a permit or emissions trading system establishes a market-based approach to carbon reduction. It involves allocating a fixed number of permits to businesses, each allowing the emission of a certain amount of carbon. Businesses can buy, sell, or trade these permits, creating a market for carbon allowances. This system promotes flexibility and cost-effectiveness, as companies with low emissions can sell their surplus permits to high-emitting entities. It also incentivizes emission reductions by making it financially beneficial for businesses to invest in cleaner technologies and practices.
The preference for one approach over the other depends on various factors. A carbon tax may be favored if simplicity and transparency are valued, as it provides a straightforward and predictable cost for emissions. It is also more easily understood by the public, making it politically more feasible in some cases. Moreover, a carbon tax allows for revenue generation that can be directed towards environmental initiatives.
On the other hand, a permit or emissions trading system might be preferred when flexibility and market dynamics are deemed important. This approach can encourage innovation and cost-effective emission reductions through market forces. It accommodates varying emission levels across industries and enables businesses to trade permits, optimizing emissions reductions across the economy.
Ultimately, the choice between a carbon tax and a permit or emissions trading system depends on the specific context, including political, economic, and social considerations. Some jurisdictions may opt for a combination of both approaches, utilizing the strengths of each to achieve their carbon reduction goals effectively.
learn more about Carbon pricing.
brainly.com/question/32391396
#SPJ11
Imagine that the 90-day T-rate bill is 3.4%. If a company wants to issue commercial paper with the same duration (90 days), what is the fair rate for this loan if they there is a default premium of 0.1% and a liquidity premium of 0.2%?
A) 3.0%
B) 3.4%
C) 3.7%
D) 4.3%
The fair rate for the commercial paper would be 3.7%.
To calculate the fair rate, we need to add the default premium and the liquidity premium to the risk-free rate. The risk-free rate is given as 3.4%. Adding the default premium of 0.1% and the liquidity premium of 0.2% to the risk-free rate gives us:
Fair rate = Risk-free rate + Default premium + Liquidity premium
= 3.4% + 0.1% + 0.2%
= 3.7%
Therefore, the fair rate for the commercial paper would be 3.7%.
To know more about risk-free rate, refer here:
https://brainly.com/question/28168891?#
#SPJ11
Bing, Incorporated, has current assets of $2,330, net fixed assets of $10,900, current liabilities of $1,430, and long-term debt of $4,140.
What is the value of the shareholders’ equity account for this firm?
Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
How much is net working capital?
Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
The value of the shareholders' equity account for Bing, Incorporated is $7,660, and the net working capital is $900.
To calculate the value of the shareholders' equity account, we need to subtract the total liabilities from the total assets. The formula for shareholders' equity is:
Shareholders' Equity = Total Assets - Total Liabilities
Given:
Current Assets = $2,330
Net Fixed Assets = $10,900
Current Liabilities = $1,430
Long-Term Debt = $4,140
Total Assets = Current Assets + Net Fixed Assets
Total Assets = $2,330 + $10,900 = $13,230
Total Liabilities = Current Liabilities + Long-Term Debt
Total Liabilities = $1,430 + $4,140 = $5,570
Shareholders' Equity = Total Assets - Total Liabilities
Shareholders' Equity = $13,230 - $5,570 = $7,660
Therefore, the value of the shareholders' equity account for Bing, Incorporated is $7,660.
To calculate the net working capital, we subtract the current liabilities from the current assets:
Net Working Capital = Current Assets - Current Liabilities
Net Working Capital = $2,330 - $1,430 = $900
Therefore, the net working capital for Bing, Incorporated is $900.
Learn more about shareholders here:
https://brainly.com/question/28452798
#SPJ11
Given the following rates, calculate the price of a 4-year 12% bond whose coupon is paid annually and par value is $1,000.
One-year spot rate is 5.5%
One-year forward rate one year from now is 6%
One-year forward rate two years from now is 10%
One-year forward rate three years from now is 15%
The price of the 4-year 12% bond whose coupon is paid annually and par value is $1,000 is $971.98.
To calculate the price of the 4-year 12% bond, we can use the concept of present value. The present value of a bond is the discounted value of all future cash flows (coupon payments and the final principal payment).
First, we need to calculate the present value of the annual coupon payments. The coupon rate is 12%, and the par value is $1,000. Therefore, the annual coupon payment is $1,000 * 12% = $120.
Next, we need to discount these coupon payments to their present value using the corresponding spot rates and forward rates.
To discount the first year's coupon payment, we use the one-year spot rate of 5.5%. The present value of the first coupon payment is $120 / (1 + 5.5%)^1 = $113.21.
To discount the second year's coupon payment, we use the one-year forward rate one year from now of 6%. The present value of the second coupon payment is $120 / (1 + 6%)^2 = $106.82.
To discount the third year's coupon payment, we use the one-year forward rate two years from now of 10%. The present value of the third coupon payment is $120 / (1 + 10%)^3 = $97.71.
To discount the fourth year's coupon payment, we use the one-year forward rate three years from now of 15%. The present value of the fourth coupon payment is $120 / (1 + 15%)^4 = $84.23.
Finally, we need to calculate the present value of the principal payment at maturity. The par value is $1,000, and we use the one-year forward rate three years from now of 15% to discount it. The present value of the principal payment is $1,000 / (1 + 15%)^4 = $570.01.
Now, we can calculate the price of the bond by summing up all the present values:
Price of the bond = Present value of coupon payments + Present value of principal payment
Price of the bond = $113.21 + $106.82 + $97.71 + $84.23 + $570.01
Price of the bond = $971.98
Therefore, the price of the 4-year 12% bond is $971.98.
To know more about bond refer here:
https://brainly.com/question/32761184#
#SPJ11
BU 7 . In scenario 1, assume that COGS is 75% of sales (which means your profit margin will be 25% on every widget you sell). The first scenario assumes that no change occurs, either in reduction in costs, or, in sales revenues. We'll call this first scenario the "as is" or, "the status quo scenario." Your sales revenue in scenario 1 is $600 million. In scenario 2, you reduce the original COGS from, 75% to 65% (through improvements in purchasing and procurement). You had to spend money (on new software, etc.) to reduce your purchasing costs and so your S&A increased by $2.0 million. Remember that in scenario 2 you don't increase your sales at all---so your sales revenues stay the same (no change from scenario 1), as do your Promotional Expenses (don't change from scenario 1) In scenario 3, you increase promotional expenses by 15% (from a starting point of $35 million), resulting in a 25% increase in annual sales revenues. S&A costs increase by $5 million. Your purchasing costs do not decrease (i.e., COGS stays the same as it was in scenariol at 75%). Scenario 1 Annual sales: $600 million. S COGS: million Gross Profit $150 million Promotional Expenses Scenario 2 $600 million S $ million million Scenario 31 S $ million million million C T Promotional Expenses $35 million Sales/Administration $5 million Total profit before taxes: million Jad $35 million million million $ million million million 3 Point Question: Based on the scenarios presented above, what implication can be drawn from the above problem?
Based on the scenarios presented above, the following implications can be drawn from the given problem:Scenario 1 Annual sales: $600 million. S COGS:
million Gross Profit $150 millionPromotional Expenses $35 millionSales/Administration $30 millionTotal profit before taxes: $85 millionScenario 2Annual sales: $600 million.S COGS: million.Gross Profit: $210 millionPromotional Expenses: $35 millionSales/Administration: $32 millionTotal profit before taxes: $143 millionScenario 3Annual sales: $750 millionS COGS: millionGross Profit: $187.5 millionPromotional Expenses: $40.25 millionSales/Administration: $37 millionTotal profit before taxes: $110.25 million.
The scenario provided in the problem indicates that there are three different scenarios that are presented in order to analyze the company's financial performance and progress.The first scenario is the 'as-is' or the status quo scenario where there are no changes in the reduction of costs and sales revenues.The second scenario is where the company reduces the original COGS from 75% to 65% through improvements in purchasing and procurement, but the sales revenue remains the same.
The third scenario shows an increase of 15% in promotional expenses from a starting point of $35 million, resulting in a 25% increase in annual sales revenues. However, the purchasing costs remain the same.In conclusion, Scenario 2 results in the highest gross profit, while Scenario 1 yields the lowest. Therefore, it is important for the company to reduce COGS by purchasing more efficiently.
To know more about revenues visit:
brainly.com/question/4051749
#SPJ11
If a product is bulky or heavy, transportation costs increase, and unless the product has an extremely high value-to-weight ratio, the least effective strategy would be.
The least effective strategy for transporting a bulky or heavy product would be air transportation.
This is because air transportation is generally more expensive compared to other modes of transportation such as road, rail, or sea. Air freight costs are typically calculated based on the weight and size of the product, and bulky or heavy products would incur higher costs due to their size and weight.
To minimize transportation costs, it would be more effective to consider other modes of transportation. Road transportation is suitable for shorter distances and offers flexibility in terms of pickup and delivery. Rail transportation is efficient for long distances and can handle heavier loads. Sea transportation is ideal for bulky products or those with low value-to-weight ratios, as it is cost-effective for larger volumes and longer transit times. These alternative modes of transportation can help reduce transportation costs while still ensuring the timely delivery of the product.
In conclusion, for bulky or heavy products, considering alternative modes of transportation such as road, rail, or sea would be a more effective strategy to minimize transportation costs.
Learn more about air transportation :
https://brainly.com/question/18836795
#SPJ11
(Interest Rate risk) Bond S has 4 years to maturity. Bond T has 30 years to maturity. Both have 9% coupons paid semi-annually, and are priced at par value. If the interest rate(yield to maturity) suddenly drops by 3.9%, the percentage change in the price of Bond T is ..........% (Keep two decimal numbers and the sign.) (Interest Rate risk) Bond S has 4 years to maturity. Bond T has 30 years to maturity. Both have 9%coupons paid semi-annually, and are priced at par value. If the interest rate(yield to maturity) suddenly rises by 3.7%, the percentage change in the price of Bond S is.......... % (Keep two decimal numbers and the sign.)
The percentage change in bond T's price would be -29.17 percent. The negative sign indicates that the bond price decreases when interest rates increase.
Bond S has 4 years to maturity while Bond T has 30 years to maturity. Both are priced at par value and have a 9% coupon paid semi-annually. If the interest rate (yield to maturity) suddenly drops by 3.9%, the percentage change in the price of Bond T is -29.17%. The price of a bond is inversely proportional to the interest rates. It means that if the interest rates rise, the bond's price falls and vice versa. This inverse relationship between price and interest rates is called interest rate risk. In order to calculate the price change in bonds, we use the duration measure which represents the time-weighted average of bond's cash flows.
Here, the bond S has a duration of 3.49 years while Bond T has a duration of 11.87 years. Using the following formula, we can calculate the price change in bonds due to a change in interest rates.
Price change in bonds = - Duration * Change in Yield / (1 + Yield)
For bond T, the price change would be:
Price change in bonds T = -11.87 * 3.9% / (1 + 3.9%) = -29.17%
Bond S and Bond T are two types of bonds that differ in their maturity period. Bond S has a four-year maturity period, while bond T has a 30-year maturity period. Both bonds have 9% coupon payments semi-annually, and their prices are equivalent to par value. The interest rate, or yield to maturity, decreases suddenly by 3.9%. The percentage change in Bond T's price is determined using the duration of the bond, which represents the time-weighted average of the bond's cash flows. Bond T's duration is 11.87 years. The formula used to calculate the bond price change due to a change in interest rates is as follows:
Price change in bonds = - Duration * Change in Yield / (1 + Yield)
As a result, the percentage change in bond T's price would be -29.17 percent. The negative sign indicates that the bond price decreases when interest rates decrease. Similarly, if the interest rate suddenly rises by 3.7%, the percentage change in the price of bond S is calculated using the same formula. Bond S has a duration of 3.49 years. The price change in bond S is Price change in bonds S = -3.49 * 3.7% / (1 + 3.7%) = -11.28%
To know more about Percentages, visit:
https://brainly.com/question/26352729
#SPJ11
You would like to accumulate $1,000,000 for retirement. You have determined that you can afford to save $25,000 per year toward your retirement goal, and you will be able to earn a return of 9 percent per year on your investments. Required: Assuming that your annual $25,000 deposits are made at the end of each year, how long will it take for you to accumulate the $1,000,000 you desire? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Period ........years
it will take approximately 19.54 years for the person to accumulate $1,000,000 for retirement.
The period of years it will take for someone to accumulate $1,000,000 for retirement can be calculated as follows:Given information:
Future Value (FV) = $1,000,000.
Payment (PMT) = $25,000.
Interest rate (r) = 9% or 0.09.
We can use the formula for Future Value of Annuity (FVAn) to solve for n:
FVAn = PMT [(1 + r)n - 1]/r$1,000,000 = $25,000 [(1 + 0.09)n - 1]/0.09
Dividing both sides by $25,000 and simplifying:$1,000,000/$25,000 = (1 + 0.09)n - 1/0.09$40 = (1 + 0.09)n - 1
Solving for n by taking the logarithm of both sides:log(40) = log(1.09)n - log(1)
Using the log function on a calculator or manually:log(40) = n log(1.09)n = log(40)/log(1.09)n ≈ 19.54
To know more about retirement visit:
brainly.com/question/15077457
#SPJ11
Imagine you are the owner of the small hotel business which you proposed to open in week 6 (the presentation that you gave before). Refer to that and apply for a grant of $100,000 for your business startup. Use the techniques they are talking about in the video for writing grant proposal and ask for funding from the bank - 1. don't forget to include what business and a little introduction about the type pf hotel you are opening. 2. how much grant you want 3. Why should they give you grant .. what are you going to add to tourism and economy. Please stick to same hotel that you sent in presentation in week?
As the owner of a small hotel business, I am applying for a grant of $100,000 for the startup. The grant proposal will include an introduction to the business, details about the hotel, the requested grant amount, and a compelling case for why the bank should provide the funding.
Subject: Grant Proposal for [Hotel Name]
Introduction:
I am writing this grant proposal to request funding of $100,000 for the startup of my small hotel business, [Hotel Name]. As previously presented in the Week 6 presentation, [Hotel Name] aims to be a boutique hotel located in a prime tourist area. Our vision is to provide a unique and memorable hospitality experience to both domestic and international travelers.
Grant Amount:
I am seeking a grant of $100,000 to support the initial investment and operational expenses of [Hotel Name]. This funding will enable us to establish a strong foundation, enhance our facilities and services, and effectively compete in the hospitality industry.
Justification for Grant:
Providing the grant for [Hotel Name] will not only contribute to the growth of our business but also bring significant benefits to the tourism sector and the local economy. By opening this hotel, we will attract more tourists to the area, creating job opportunities and generating revenue for local businesses. Additionally, our commitment to sustainable practices will promote responsible tourism, preserving the environment and cultural heritage of the region.
Furthermore, [Hotel Name] will actively participate in community initiatives, supporting local events and partnering with local suppliers to promote the region's unique offerings. Our dedication to exceptional guest experiences and personalized services will help position the destination as a must-visit location, attracting more visitors and bolstering the local economy.
In conclusion, I kindly request the bank's support through a grant of $100,000 for the establishment and success of [Hotel Name]. Your investment will not only contribute to the growth of our business but also make a positive impact on the tourism industry and the overall economy. We are committed to delivering outstanding experiences, driving tourism, and fostering economic development. Thank you for considering our grant proposal.
[Your Name]
[Title/Position]
[Contact Information]
Learn more about the hotel business here:
https://brainly.com/question/14753324
#SPJ11
PPR Corporation plans to begin paying dividends in 8 years. The first five dividends will be as follows: D8 = $5. 60, D9 = $5. 60, D10 = $5. 54, D11 = $5. 54, and D12 = $5. 04 respectively. After five years of dividend payments, dividends are expected to grow at a constant rate of 4. 00 percent forever. PPR's required rate of return is 11. 00 percent. What is the current price (P0) of PPR common stock?
The current price (P0) of PPR common stock can be calculated using the dividend discount model (DDM).
First, we calculate the present value of the future dividends during the high growth phase (D8 to D12) using the formula for the present value of a growing perpetuity. Then, we calculate the present value of the dividends beyond year 12 using the formula for the present value of a perpetuity. Finally, we sum up the present values of the dividends to obtain the current price (P0).
To calculate the present value of the future dividends during the high growth phase (D8 to D12), we can use the formula for the present value of a growing perpetuity: PV = D8 / (r - g), where PV is the present value, D8 is the dividend in year 8, r is the required rate of return, and g is the growth rate. Substituting the values, we get PV = $5.60 / (0.11 - 0.04) = $93.33.
Next, we calculate the present value of the dividends beyond year 12, which are growing at a constant rate of 4.00 percent. We can use the formula for the present value of a perpetuity: PV = D12 * (1 + g) / (r - g), where D12 is the dividend in year 12. Substituting the values, we get PV = $5.04 * (1 + 0.04) / (0.11 - 0.04) = $76.80.
Finally, we sum up the present values of the dividends: P0 = PV(D8-D12) + PV(D13-infinity) = $93.33 + $76.80 = $170.13. Therefore, the current price (P0) of PPR common stock is $170.13.
Learn more about stock valuation here: brainly.com/question/31965614
#SPJ11
briefly define a scope statement and explain any six items that
the team can include in their scope
A scope statement is a document that outlines the specific objectives, deliverables, and boundaries of a project.
It defines the work that needs to be accomplished and sets the parameters for the project's execution. It serves as a reference point to ensure that all stakeholders have a clear understanding of what is included and excluded from the project.
Six items that the team can include in their scope statement are:
1. Project objectives: Clearly state the desired outcomes and goals of the project. This helps align the team's efforts towards a common purpose.
2. Deliverables: List the tangible or intangible products, services, or results that will be produced as part of the project. This provides a clear understanding of what will be accomplished.
3. Project boundaries: Define the limits and constraints of the project. This can include factors such as time, budget , resources, and any external dependencies or restrictions.
4. Project stakeholders: Identify the individuals or groups who have an interest or influence in the project. This helps ensure effective communication and engagement with key stakeholders.
5. Project requirements: Specify the functional, technical, and performance criteria that must be met for the project to be considered successful. This helps guide the team's work and ensures that the project meets the desired standards.
6. Assumptions and constraints: Document any assumptions made or limitations imposed on the project. This includes factors that are taken for granted or considered true without further validation, as well as any factors that might restrict or impact the project's execution.
By including these items in the scope statement, the team can establish a clear understanding of the project's objectives, boundaries, deliverables, stakeholders, requirements, and constraints. This promotes effective planning, communication, and decision-making throughout the project lifecycle.
Learn more about budget here:
https://brainly.com/question/31952035
#SPJ11
Are ethical dilemmas
always problems, or can they also be opportunities. Justify your
answer.
Ethical dilemmas can indeed be both problems and opportunities, depending on how they are approached and addressed.
Here's a justification for why ethical dilemmas can be seen as both:
1. Problems:
Ethical dilemmas often arise when there are conflicting moral principles or values, creating challenging situations with no clear right or wrong . They can create moral distress, internal conflicts, and feelings of uncertainty. Ethical dilemmas present problems because they require individuals or organizations to make difficult choices and navigate complex ethical terrain. They can be sources of stress, tension, and potential harm if not appropriately addressed.
2. Opportunities:
Ethical dilemmas also provide opportunities for growth, learning, and the development of ethical decision-making skills. They challenge individuals and organizations to critically reflect on their values, principles, and ethical frameworks. By engaging with ethical dilemmas, individuals can enhance their moral reasoning abilities, empathy, and understanding of diverse perspectives. Ethical dilemmas can foster a culture of ethical awareness, accountability, and responsible decision-making within organizations.
Furthermore, ethical dilemmas can lead to positive outcomes such as:
a) Increased Ethical consciousness: Ethical dilemmas can prompt individuals and organizations to reevaluate their values, principles, and practices. They provide opportunities to align actions with ethical standards and promote ethical behavior in all aspects of life.
Learn more about consciousness here:
https://brainly.com/question/2274876
#SPJ11
A trader buys one European call option at a strike price of $83 per barrel that gives the right to buy 100 barrels of oil. The current price of oil is $79, the expiration is in two months, and the option premium per barrel of oil is $5. a. If oil is $87 at expiration, what is the buyer's dollar profit or loss? Should the buyer exercise the option? b. If oil is $80 at expiration, what is the buyer's dollar profit or loss? Should the buyer exercise the option? c. If oil is $85 at expiration, what is the buyer's dollar profit or loss? Should the buyer exercise the option?
The buyer's profit or loss can be calculated by subtracting the total cost from the total revenue obtained from exercising the option. Whether the buyer should exercise the option depends on whether the profit from exercising is greater than the option premium paid.
If oil is $87 at expiration, what is the buyer's dollar profit or loss? Should the buyer exercise the option?To calculate the buyer's profit or loss when oil is $87 at expiration, we need to consider the following:
1. The cost of buying the call option: $5 (option premium per barrel) × 100 barrels = $500.
2. The revenue from exercising the option: ($87 − $83) × 100 barrels = $400.
3. The buyer's profit or loss: Revenue − Cost = $400 − $500 = -$100 (loss).
Since the buyer would incur a loss of $100 by exercising the option, it is not favorable to exercise the option.
Learn more about buyer's profit
brainly.com/question/30300708
#SPJ11
X Inc. has one issue of debt outstanding. It is a 21-year debt issued 7 years ago at par value with a coupon rate of 4.3%, paid annually. Today, the debt is still selling at par value. If the firm’s tax bracket is 21%, what is its after-tax cost of debt? Assume a face value of $1,000.
The after-tax cost of debt of X Inc. is 3.39%.
first, find the annual coupon payment using the formula: Coupon Payment = Coupon Rate x Face Value = 4.3% x $1,000 = $43; next, calculate the before-tax cost of debt using the formula: Before-Tax Cost of Debt = Coupon Payment ÷ Market Value of Debt; lastly, calculate the after-tax cost of debt using the formula: After-Tax Cost of Debt = Before-Tax Cost of Debt x (1 − Tax Rate).
X Inc.'s after-tax cost of debt is 3.39%. First, calculate the annual coupon payment, which is equal to the coupon rate multiplied by the face value, or $43. Next, find the before-tax cost of debt using the formula Coupon Payment ÷ Market Value of Debt. Since the debt is selling at par value, the market value is the same as the face value of $1,000.
Therefore, the before-tax cost of debt is $43 ÷ $1,000 = 0.043 or 4.3%. Lastly, find the after-tax cost of debt using the formula Before-Tax Cost of Debt x (1 − Tax Rate). Since X Inc.'s tax bracket is 21%, the after-tax cost of debt is 4.3% x (1 - 0.21) = 3.39%.
To know more about Cost visit.
https://brainly.com/question/14566816
#SPJ11
For the following scenarios, use word or some word processing program please do the following. Identify the elements of scarcity, choice, and opportunity cost in each. Should be short an sweet: 1. The Environmental Protection Ageney is considering an order that a 500 -acre area on the outskirts of a large city be preserved in its natural state, because the area is home to a rodent that is considered an endangered species. Developers had planned to build a housing development on the land. 2. The manager of an automobile assembly plant is considering whether to produce cars or sport utility vehicles (SUVs) next month. Assume that the quantities of labor and other materials required would be the same for either type of production. 3. A young man who went to work as a nurses' aide after graduating from high school leaves his job to go to college, where he will obtain training as a registered nurse.
1. If the land is preserved, the opportunity cost would be the housing development that could have been built. On the other hand, if the land is used for development, the opportunity cost would be the preservation of the natural habitat and the endangered rodent species.
2. If SUVs are produced, the opportunity cost would be the production of cars. The opportunity cost in this scenario is the forgone production of the alternative vehicle.
3. If he continues as a nurses' aide, the opportunity cost would be the education and training as a registered nurse. The opportunity cost in this scenario is the alternative path that is forgone in pursuit of the chosen option.
1. In the first scenario, the elements of scarcity, choice, and opportunity cost can be identified as follows. Scarcity arises from the limited availability of land on the outskirts of the large city. The Environmental Protection Agency is considering preserving a 500-acre area in its natural state due to the endangered rodent species present there. This implies that there is a limited amount of land that can be used for development purposes. The choice here is between preserving the land or allowing developers to build a housing development.
2. In the second scenario, the elements of scarcity, choice, and opportunity cost are evident. The manager of an automobile assembly plant is deciding whether to produce cars or sport utility vehicles (SUVs) next month. Both options require the same quantity of labor and materials. Scarcity comes into play as the plant has limited resources and can only produce one type of vehicle. The choice is between producing cars or SUVs. If the manager decides to produce cars, the opportunity cost would be the production of SUVs.
3. In the third scenario, scarcity, choice, and opportunity cost are evident as well. The young man who worked as a nurses' aide is leaving his job to go to college and become a registered nurse. Scarcity is present as the young man can only pursue one path at a time - either continuing as a nurses' aide or going to college. The choice is between staying in his current job or pursuing higher education. If he chooses to go to college, the opportunity cost would be the salary and experience he could have gained by staying as a nurses' aide.
Overall, these scenarios highlight how scarcity necessitates making choices and understanding the opportunity costs associated with each decision.
Learn more about opportunity cost
https://brainly.com/question/32971162
#SPJ11
The Amgen Biotec Co. just paid a dividend of $1 per share (Be careful, the word "just paid" makes the dividend of $1 a current dividend Do, not D1.). Analysts expect its dividend to grow at 25% per year for the next three years and then 5% per year thereafter. If the required rate of return on the stock is 18%, what is the current value of the stock?
The current value of the stock is $3.48 per share.
Here are the steps required to compute the current value of the stock:
Step 1: Calculate the current dividend
Using the statement, the Amgen Biotec Co. just paid a dividend of $1 per share, this implies that the current dividend D0 is $1.00 per share.
Step 2: Calculate the dividends for the next three years
At a growth rate of 25%, the dividends for the next three years are given by:
D1 = D0 (1 + g) = $1.00 (1 + 0.25) = $1.25 per share
D2 = D1 (1 + g) = $1.25 (1 + 0.25) = $1.563 per share
D3 = D2 (1 + g) = $1.563 (1 + 0.25) = $1.953 per share
Step 3: Calculate the dividends after the third year
At a growth rate of 5%, the dividends after the third year can be calculated using the following formula:
D3(1 + g) / (r - g) = $1.953(1 + 0.05) / (0.18 - 0.05) = $21.30 per share
Step 4: Calculate the current value of the stock
Using the dividend discount model (DDM), the current value of the stock can be calculated as follows:
P0 = (D1 / (1 + r)) + (D2 / (1 + r)2) + (D3 / (1 + r)3) + ... + (Pn / (1 + r)n)
Where r is the required rate of return on the stock and n is the number of periods.
In this case, n = 3 because the dividends are expected to grow at 25% for the next three years. So, the formula can be simplified as:
P0 = (D1 / (1 + r)) + (D2 / (1 + r)2) + (D3 / (1 + r)3)
P0 = ($1.25 / (1 + 0.18)) + ($1.563 / (1 + 0.18)2) + ($1.953 / (1 + 0.18)3)
P0 = $1.06 + $1.17 + $1.25P0 = $3.48
To know more about the stock, visit:
https://brainly.com/question/28018384
#SPJ11