Answer:
a.varies a great deal across countries.
Explanation:
Corporate governance is a mixture of the rules and laws by which the business operates and is regulated and controlled this term involves the external and the external factors that impact the compactors stakeholders, customers, shareholders, and the management. However the structure differs form nations to nations on the basis for the roles played by the governments and that includes the monitoring the actions, policies, and the decisions of the corporations. Countries like the U.K, Canada, Ireland, United States, and New Zealand are the top five countries in the corporate governance scale with an overall rating of 7.6 to 6.7.eriod costs ________. should be treated as an indirect cost rather than as a direct manufacturing cost seldom influence financial success or failure include only fixed costs include the cost of selling, delivering, and after-sales support for customers
Answer:
include the cost of selling, delivering, and after-sales support for customers
Explanation:
The period cost is the cost which includes the major part of the selling and admin expenses plus it is also not capitalized and can be incurred according to the passage of time
So as per the given situation, the third option is correct as it includes the selling, delivering cost and after sales support
Therefore all the other options are wrong
Consider the market for university economics professors. Suppose the opportunity cost of going to graduate school to get a Ph.D. in economics increases for many individuals. Suppose it generally takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the equilibrium quantity of university economics professors will
a.
increase.
b.
decrease.
c.
not change.
d.
It is not possible to determine what will happen to the equilibrium quantity.
Answer:
B. Decrease
Explanation:
Base on the scenario been described in the question, when the P.HD in economics increase, it will in turn make the equilibrium wage to increase. The labor market, sometimes called as the job market, refers to the demand and supply for labor in which employers provide the demand and employees the supply
Quantification Group of answer choices often makes our observations more explicit. limits the possibility of statistical analyses. can increase bias. can make it more difficult to aggregate data. can make it more difficult to summarize data.
Answer:
The correct answer is letter "A": often makes our observations more explicit.
Explanation:
Quantification helps to add or to summarize information faster. In this process of data classification, statistical analysis can be generated which allows data understanding to be easier through the arranging of information through charts. Therefore, data is more explicit. To do so, mathematical calculations may be necessary.
Kimberly's Crown sells and designs jewelry. Despite the jewelry's popularity, products are available only through a few shopping stores across the country. When one of the stores complains that the jewelry they're being given is inferior to the jewelry Kimberly sells to other stores, Kimberly experiences ________ conflict. A. intensive B. vertical C. horizontal D. multitiered E. subjective
Answer:
B. vertical
Explanation:
Based on the scenario being described within the question it can be said that in this situation Kimberly experiences vertical conflict. This term refers to a type of conflict that occurs between two type of companies within the same industry/market. Such as in this case since the conflict is between Kimberly's store and a competing store within the same industry.
Vertical conflict is generally occurred at the time of disagreement on a certain case between two members on consecutive levels.
Hence, correct option is B.
Kimberly experiences vertical conflict.
Kimberly is experiencing vertical conflict in this position, according to the scenario mentioned in the question. This term refers to a disagreement between two types of businesses in the same industry or market. As in this situation, where the dispute is between Kimberly's store and a competitor in the same business.
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Firms generally choose to finance temporary net operating working capital with short-term debt because Select one: a. Matching the maturities of assets and liabilities reduces risk. b. Short-term interest rates have traditionally been more stable than long-term interest rates. c. A firm that borrows heavily long-term is more apt to be unable to repay the debt than a firm that borrows heavily short-term. d. The yield curve has traditionally been downward sloping. e. Sales remain constant over the year, and financing requirements also remain constant
Answer:
a. Matching of assets and liabilities reduces risk
Explanation:
Working capital refers to the funds required by a firm to carry out it's routine and day to day operations. It is also expressed as,
[tex]Working\ Capital\ =\ Current Assets\ -\ Cuurent Liabilities[/tex]
Both current assets and current liabilities represent benfits and obligations with their respective durations being less than an year i.e short term.
When funding it's working capital requirements, a firm resorts to short term financing in the form of debt. The reason being, such funds are only required for short term i.e within an operating cycle.
Matching of assets and liabilities reduces liquidity risk in the sense that, when such short term debt matures and requires repayment, the short term assets financed by such debt also mature and the proceeds from such assets can be used to pay off such debt.
Secondly, the cost of short term debt, is usually lesser than the cost of availing long term debt since, debt issued for long term carries greater risk and thus requires higher interest rate as compensation.
Danube Corp. purchased a used machine for $ 16,000. The machine required installation costs of $ 6,000 and insurance while in transit of $ 800.
At which of the following amounts would the machine be recorded?
a) $16,000 b) $22,000 c) $16,800 d) $22,800
Comfort Cords produces curtain cords. In the process of manufacturing those cords, it also produces hair ties which are sold separately. In the month of June, 60,000 units of cords were manufactured which resulted in the production 10,000 hair ties. 50,000 cords were sold at a price of $12 and 9,000 hair ties were sold at a price of $1.00. Joint costs incurred in the process amounted to $450,000. What is the value of revenue in June for Comfort Cords?
Answer:
$609,000
Explanation:
The revenue in June for Comfort Cords is the sum of the revenue from cords and hair ties.
The revenue from each is the product of the unit selling price and the quantity sold.
= 50000 * $12 + 9000 * $1
= $600,000 + $9000
= $609,000
The affirmative action process demands all of the following EXCEPT ________.
a. analysis of the demographics of the current company workforce.
b. survey of the relevant labor market to determine its demographics.
c. comparison of the current company workforce with the available labor market.
d. hiring of people in underrepresented classes, regardless of qualifications.
Answer: D. hiring of people in underrepresented classes, regardless of qualifications.
Explanation: Employment using quota as a criteria and hiring people without regards to qualification just because they are from under represented class, is not an affirmative action and will lead to mediocrity.
Hiring should be based on analysis of demographics of the current company workforce, survey of the relevant labor market and comparison of the current company workforce and workforce available in the labor market.
Answer:
d. hiring of people in underrepresented classes, regardless of qualifications.
Explanation:
The affirmative action process demands analysis of the demographics of the current company workforce, survey of the relevant labor market to determine its demographics and comparison of the current company workforce with the available labor market.
However, it is counterproductive to hire people in underrepresented classes, regardless of qualifications.
Palmer corp is considering the purchase of a new piece of equipment. the cost savings from the equipment would result in an annual increase in net income after tax of "$100,000" . the equipment will have an initial cost of "$400,000" and have a "7" year life. if the salvage value of the equipment is estimated to be "$75,000" , what is the payback period
Answer:
4 years
Explanation:
Payback period is the time in which a project returns back the initial investment in the form of net cash flow.
Initial Investment = $400,000
Annual increase in net Income = $100,000
Payback period = Initial Investment / Annual increase in net income
Payback period = $400,000 / $100,000
Payback period = 4 years
The initial cost of $400,000 will be paid back in only 4 years time by the equipment.
Contractionary fiscal policy to prevent real gdp from rising above potential real gdp would cause the inflation rate to be ________ and real gdp to be ________.
Answer:
Contractionary fiscal policy to prevent real gdp from rising above potential real gdp would cause the inflation rate to be LOWER and real gdp to be LOWER.
Explanation:
A government engages in contractionary fiscal policy when it decreases spending or increases taxes. This is done to lower the economy's inflation rate, but it also decreases aggregate income which will decrease aggregate supply, resulting in a lower real gross domestic product.
A contractionary fiscal policy, like reducing government spending or increasing taxes, will lower the inflation rate and bring real GDP closer to its potential when the economy is operating above potential GDP. The policy reduces aggregate demand, lowering inflation and causing minimal changes to the real GDP.
Explanation:The question asked is, 'What would be the impact of a contractionary fiscal policy utilized to prevent real GDP from rising above potential real GDP on inflation rate and real GDP?' Contractionary fiscal policy refers to government measures, such as decreasing government spending or increasing taxes, to reduce economic growth and control inflation. Applied to an economy operating above potential GDP, characterized by low unemployment and rising inflation, contractionary fiscal policy could help bring the economy back to equilibrium.
As a result of using contractionary fiscal policy to prevent real GDP from rising above potential real GDP, the inflation rate would be lower and the real GDP would be closer to its potential. This happens as the reduction in government spending or increase in taxes decreases aggregate demand, applying downward pressure on price levels (thereby lowering inflation) while causing very little reduction in output or rise in unemployment (thus real GDP is closer to potential).
Fiscal policy can contribute in pushing aggregate demand beyond potential GDP, leading to inflation. When the rising percentage of debt to GDP creates uncertainty in global markets, the government might resort to inflationary tactics to reduce real debt's real value. Thus, effectively, if the government has borrowed at a fixed interest rate, resulting inflation above that rate allows the government to repay its debt effectively at a negative real interest rate. Therefore, applying a contractionary fiscal policy can help stabilize the economy by reducing inflation and pulling real GDP closer to its potential value.
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________ occurs when a product's performance is below expectations and the consumer is dissatisfied. Group of answer choices A.Positive disconfirmation of expectations B.Negative disconfirmation of expectations C.Reverse dissonance D.Postpurchase analysis E.Brand loyalty
Answer:
B.
Explanation:
Negative disconfirmation of expectations occurs when a product's performance is below expectations and the consumer is dissatisfied. This can occur for a large number of reasons , including wrong target market, beter competition, and even bad pricing strategy or some of the many possible reasons. This disconfirmation is negative, which is posited to decrease post-purchase or post-adoption satisfaction
The following information came from the income statement of the Wilkens Company at December 31, 2017: sales revenue $1,800,000; beginning inventory $160,000; ending inventory $240,000; and gross profit $600,000. Inventory turnover is 6 times per year. What is Wilkens' days in inventory for 2017?
Answer:
Wilkens' days in inventory for 2017 = 60.833
Explanation:
Given:
Sales = $1,800,000
Beginning inventory = $160,000
Ending inventory = $240,000
Gross profit = $600,000
Inventory turnover = 6 times
Wilkens' days in inventory for 2017 = ?
Computation of Wilkens' days in inventory for 2017:
Wilkens' days in inventory for 2017 = Number of days in a year / Inventory turnover
Wilkens' days in inventory for 2017 = 365 / 6 times
Wilkens' days in inventory for 2017 = 60.833
Mr. Thompson is a professor of marketing at the local university. In the student orientation program, he addressed the freshmen regarding the advantages of taking marketing as a major course. Which of the following types of advertising did Mr. Thompson use?Persuasive AdvertisingPersonal SellingPublic Relations
Answer:
Persuasive Advertising
Explanation:
Persuasive advertising is a type of advertising strategy to promote a product and its main purpose is to influence consumers to buy a particular product. Persuasive advertising is done through a variety of advertising methods, including television, mail, websites, newspapers, and radio. Persuasive advertising skills are very important in the business and marketing arena, because it helps marketing professionals to fight sales, new product openings and competitors.For all its similarities to a monopolist in the short run, the monopolistically competitive firm faces one huge problem that the monopolist does not in the long run: a) demand is downward sloping. b) other firms can enter the market. c) products are differentiated. d) other firms cannot enter the market.
Answer:
B) other firms can enter the market.
Explanation:
In a monopolistically competitive market, there are lots of suppliers that offer differentiated products to lots of consumers, e.g. restaurants. In a monopolistic market, only one supplier exists.
In a monopolistically competitive market the barriers of entry are low, and other competitors can continually enter the market, while it is very difficult for other competitors to enter a monopolist's market.
Sarah owns and operates a retail sporting goods business as a sole proprietor. Her store is located on the ground floor of a two-story building that she owns. Based on the following information regarding 2017, compute her net self-employment income (for SE tax purposes) to be put onto Schedule C for that year.
Gross profit from sporting goods business = $100,000
Rental income from upper level (45%) of building = 20,000
Building depreciation expense = 10,000
Utilities for ground floor (Tenant pays own utilities.) = 4,500
Depreciation on vehicles used in business = 3,000
Gain on sale of van used 100% in business = 2,000
Contributions to her Keogh retirement plan = 5,500
Sarah's health insurance premiums = 4,000
Mortgage interest on building = 10,000
Other expenses of running her sporting goods business = 11,500
A. $70,000
B. $64,500
C. $66,000
D. $73,500
Answer:
A. $70,000
Explanation:
From the information given, we discover that
Gross profit from sporting goods business = $100,000
Subtract: other Expenses = 11500
Subtract: Building depreciation expenses (10000 × 55%) = 5500
Subtract: Mortgage Interest (10000 × 55%) = 5500
Subtract: Depreciation on vehicle used for business = 3000
Less: Utilities for Ground Floor = 4500
Net Self employment Income = $70,000
Note that 55% is used for ground floor, it is calculated as 100 - 45% used by tenant, therefore, for business purpose 55% will be taken.
Answer:
Answer is A.$70,000
Refer below.
Explanation:
The final value is $70,000.
While the majority of economists acknowledge that intellectual property rights do provide a method for increasing the rate of return for inventors, some have suggested there are number of reasons to doubt whether patents provide
A. sufficient benefits for society as a whole.
B. completely appropriate benefits for the whole of society.
C. completely appropriate incentives for innovation.
D. sufficient incentives for innovation, as well as c.
Answer:
D. sufficient incentives for innovation, as well as c.
Suppose a perfectly competitive firm and industry is in long-run equilibrium and the firm earns an economic profit in the short run. Which of the following is likely to occur in the long run?
The market supply curve will shift to the right, and the market price will decrease.price exceeds average variable cost.an economic loss.
Answer:
The market supply curve will shift to the right, and the market price will decrease.
Explanation:
The economic profit attracts new firms in the market which increases the supply in the market so the price decreases and the quantity increases, the market firms will increases up to the economic profit equal to zero so in long run the firms earn zero economic profit.
A marketing professor wanted to do everything possible to ensure that her students understood her lectures. Accordingly, she used examples of marketing activities with which most students were familiar. For example, the professor discussed the marketing exchanges between students and grocers, college bookstores, convenience stores, and clothiers. The examples used by the professor were her attempt to ________ her message to encourage better understanding on the part of her students.
Answer:
effectively encode
Explanation:
The aim of communication is to create an understanding between the receiver and the sender. Effectively encode means that the sender is making an attempt to deliver the message in a coded manner such that it would be clearly and easily understood by the receiver.
Example of effectively encode message is when a teacher uses marketing activities which students are familiar with like an exchange between students and grocers, college book stores, convenience stores and clothiers.
In the example above, the sender is able to accomplish his mission of effectively delivering the message by making comparisons that are familiar to the students.
Answer:
Sarah is attempting to effectively encode her message to encourage better understanding.
Explanation:
To begin with, encoding is a term in communication which describes the conversion of ideas into gestures or words that convey meaning. In other words, it is the art of channelling information to receivers in ways that they can understand.
As a professor marketing, Sarah is well versed in marketing exchange but wants to ensure that her students understand the concept better as she does. To achieve this, Sarah logically converts the ideas (encode) she has on marketing exchange through lots of relatable examples that foster better or effective understanding of the subject matter.
In the long run, the economy is:A) self-correcting, as commodity prices rise during recessionary gaps and fall during inflationary gaps to move the economy to long-run equilibrium. B) self-correcting, as prices of goods that are sticky in the short run become very flexible in the long run and thus move the economy to full employment. C) fluctuating, as nominal wages rise and fall during short-run economic fluctuations. D) self-correcting, as nominal wages rise during recessionary gaps and fall during inflationary gaps to move the economy to long-run equilibrium.
Answer: B. self-correcting, as prices of goods that are sticky in the short run become very flexible in the long run and thus move the economy to full employment.
Explanation: In a long run the economy self correct as price of goods that are sticky in the short run become very flexible in the long run and it thus being the economy to full employment.
The idea of Economy self-correcting is that when an economy is producing at an equilibrium level of output below or above its full employment, will return on its own to full employment level left on its own accord. It requires flexible wages and prices, so therefore it is only going to happen at the long run.
During a financial crisis in the early 2000s, the government of Argentina partially froze bank accounts for a year. Given the supply of saving and the demand to borrow functions, we would expect this action to cause the interest rate to:
A. decrease and borrowing to decrease.
B. decrease and borrowing to increase
C. increase and borrowing to decrease
D. increase and borrowing to increase.
Answer:
C
Explanation:
Given the supply of saving and the demand to borrow functions, we would expect interest rate to increase and borrowing to decrease.
As interest rate increases the cost of borrowing increases and is more expensive. At lower interest rates, the cost of investing decreases and the funds that are demanded for investment would increase. This government action cause a poor macroeconomic environment in Argentina. This would cause output in Argentina to fall, and a rise in unemployment. Income poverty will grow in Argentina.
where x1 and x2 represent number of units of production of basic and advanced iPods, respectively. Production time required for the basic iPod is 6 hours per unit, and production time required for the advanced iPod is 8 hours per unit. Currently, 60 hours are available. The cost of hours is already factored into the profit function. Formulate an optimization problem that can be used to find the optimal production quantity of basic and advanced iPods. Solve the optimization model you formulated, what is the optimal value of the objective function? Round your answer to one decimal place.
The number of basic units is 3 and the number of advanced unit is 4.
Explanation:
Optimization function is a real valued function that is either minimized or maximized relative to the given set of feasible variables. Therefore if our maximum value for the production of both types of Ipod is 50 hours and if it takes 6 hours to produce basic Ipod and 8 hours to produce advanced Ipod than optimization model is expressed as 6*x + 8* y = 50. From this we have a set of possible solutions.
If x =0 than y =6, 2 it is not possible since it is not the natural number.
If y =0 than x =3, 57, it is not a natural number.
The only solution that satisfy the above condition is when x =3 and y = 4.
Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 36 units of food per year or 18 units of clothing. Which of the following is true?
1.Georgeland has an absolute but not a comparative advantage in producing clothing.
2.Georgeland has both an absolute and a comparative advantage in producing clothing.
3.Alland has an absolute but not a comparative advantage in producing food.
4.Alland has both an absolute and a comparative advantage in producing food.
Answer:
1.Georgeland has an absolute but not a comparative advantage in producing clothing.
Explanation:
Georgeland has an absolute advantange, because with the factors of production that it has available (the question does not specify the amount), it can produce either more food, or more clothing than Alland.
But Georgeland does not have comparative advantage in producing clothing, because the cost of opportunity of doing so is higher than Alland's, as can be seen in this comparison:
If Alland produces 16 units of clothing, it gives up on 32 units of food.
If Georgeland produces 18 units of clothing, it gives up on 36 units of food.
Jerilyn is in the early stages of an inoperable cancer. she has prepared a signed and witnessed written document directing her family not to allow any artificial or heroic steps to be taken in the event that she is unable to make her wishes known at the appropriate time. what is this document called
Answer:
Living will.
Explanation:
Living will can be described as a legal document in which an individual clearly states the type of treatment he or she will prefer in a situation whereby they are unable to communicate their wishes.
A living will enables an individual to make the right decision on the form of life support treatment that he or she would prefer to help aviod any form of confusion.
Answer:
Living will
Explanations:
A living will is a legal document that enables people state their wishes for end of life medical care in the event they are unable to communicate their actions then. It can also be called "an advance directive". It states the desire of an individual to donate an organ after death.
It is a document in which a. Individual specified the kind of medical care they want and what they do not in case they can't speak later. Doctors consult the living will of a patient who is unable to talk in order to determine the kind of treatment the patient want or not.
Jarilyn has prepared a legal document stating that her family should not allow any artificial or heroic steps to be taken on her in case her cancer grows worse and she is unable to speak on what she wants.
Assume you are going to lunch and have a choice of two meals. The first meal would give an increase in marginal utility of 100 with a $25 price. The second meal would give you an increase of only 10 with a $2 price. The third meal will give you an increase of 50 with a $5 price. Which meal should you logically choose ?
Answer:
Meal 3 = 50 utils / $5 = 10 utils per dollar spent
Explanation:
Logically, the meal with highest utility per Dollar spent would be the priority for me. So here:
Meal 1 = 100 utils / $25 = 4 utils per dollar spent
Meal 2 = 10 utils / $2 = 5 utils per dollar spent
Meal 3 = 50 utils / $5 = 10 utils per dollar spent
As meal 3 has highest utility per dollar spent, it will generate higher value for me. So I will opt meal 3.
Much fanfare was made about anthony's latest bonus in the office. he has always been a high performer. however, this year he received an extra-large bonus. his co-worker hannah got a little tired of hearing about anthony's bonus and decided that next year she would win some of the bonus money. which advantage of individual incentives does this illustrate?
Answer:
May motivate less productive employees to work harder.
Explanation:
When an employee is recognised and rewarded for exceptional performance, apart from boosting the moral of the employee it also challenges other employees to perform better on their jobs.
In this instance Anthony has been receiving bonuses for being a high perfomer. This time around he an extra large bonus for his performance.
Because of this Hannah gets motivated to also perform better at her job so she can also get a bonus.
Nora contracts to work for ABC Investments during June for $2,500. On May 31, ABC cancels the contract. Nora refuses to accept a similar job with first State Bank, which would pay $2,000. Nora files a suit against ABC. As compensatory damages, Nora can recover:________.
a. $2500
b. $2000
c. $500
d. nothing
Answer:
c. $500
Explanation:
A contract is an agreement by two or more parties to perform a.certain activity within a given time.
When contract are breached, the beneficiary has the right to gain back the amount promised.
If the beneficiary can get another option, the other party is obligated to pay the balance.
On this instance Nora had the chance to get a new job at $2,000 salary the balance is $2,500 - $2,000= $500. Since she rejected the job she is responsible for that loss.
However ABC is still liable to pay the balance of $500
Nora can recover $500 as compensatory damages from ABC Investments, representing the difference between her contract with ABC and the salary offered by First State Bank, which she refused.
Explanation:Nora can recover compensatory damages for the loss she suffered due to ABC Investments canceling the contract. Under the duty to mitigate damages, the plaintiff must take reasonable steps to minimize their loss. Since Nora refused to accept a similar job at First State Bank, which was offering $2,000, she did not fulfill this duty completely. The difference between the original contract price and the salary of the new job offer represents the amount she could recover, which is $500 ($2,500-$2,000). Therefore, the correct answer is option C: $500.
Balenciaga Distributors provides intermediary services for a variety of food and beverage wholesalers. Over time, those wholesaler customers have demanded that Balenciaga Distributors begin financing transactions, grading fresh fruit and produce, and providing market information and marketing research. These services are primarily an example of wholesale customers demanding more of which type of intermediary functions?
The services demanded by wholesale customers, such as financing transactions and grading fresh produce, are examples of wholesale intermediary functions.
Explanation:The services demanded by the wholesale customers, such as financing transactions, grading fresh fruit and produce, and providing market information and marketing research, are examples of wholesale intermediaries functions. Wholesale intermediaries bridge the gap between producers and retailers, helping to facilitate the flow of products from manufacturers to end consumers.
These functions help to ensure that the products meet quality standards, are properly marketed, and reach the desired target market efficiently. By providing these services, Balenciaga Distributors is satisfying the demands of their wholesale customers and adding value to their business relationship.
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Antivenin is a(n)_______antigen produced from a virus.
a. antitoxin used to treat exposure to a venom.
b. vaccine made toward the endotoxin of a virus.
c. antiserum produced from hybridomas.
d. vaccine produced against the endotoxin of a bacterium.
Answer:
A. antitoxin used to treat exposure to a venom.
Explanation:
Antivenin is the antibodies created in the blood of animal when venom is injected in their body. It act as a neutralizer to the snake venom which entered in the body. In the human body, it can be used only once to treat snake bite as it may create allergic reaction in the human body. It was developed by Albert Calmette, a french Scientist.
Antivenin is an antitoxin used to treat exposure to a venom antigen produced from a virus.
Zino Company determines that a customer balance of $200, from Hollis Co., is uncollectible. Zino uses the allowance method to account for bad debts.
The entry to write off the uncollectible balance will include a:
A) debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
B) debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts.
C) debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
D) debit to Allowance for Doubtful Accounts and a credit to Bad Debts Expense.
Answer:
debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
Explanation:
In accounting the allowance method is used to recognise and post portions of account recievable that is uncollectible. It involves an adjusting entry that changes the balance sheet figure for account receivable.
For example in the given instance a customer balance of $200, from Hollis Co., is uncollectible. The allowance method is used to pass the following entry:
debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable of $200
Holmgren Hotels’ stock has a required return of 8 percent. The stock currently pays a dividend of $1.00 per share. The dividend is expected to stay the same for two years. After two years, the dividend is expected to grow at a rate of 6 percent forever. What should be Holmgren’s stock price today?
Answer:
$48.09
Explanation:
using the constant growth model, we can determine the price of the stock in two years:
stock price = $1/1.08 + $1/1.08² + [($1 x 1.08)/(8% - 6%)] /1.08²
the constant growth formula = ($1 x 1.08)/(8% - 6%) = $54stock price = $1/1.08 + $1/1.08² + $54/1.08² = $0.93 + $0.86 + $46.30 = $48.09
To calculate the stock price of Holmgren Hotels' today, we need to calculate the present values of the expected dividends and add them together. This is done by applying the Gordon growth model. The calculated stock price of Holmgren Hotels' is approximately $38.41.
Explanation:The subject of this question pertains to the field of Finance, often taught under the broader umbrella of Business studies. We will use a formula of a stock's valuation in financial markets, which are typically calculated using expected dividends and a required rate of return using a perpetuity growth model. First, we calculate the present values (PV) of the dividends for the first two years: PV = D1 / (1+r) + D2 / (1+r)^2, where D represents the dividend and r represents the required rate of return. In this case, D1, D2, and r are $1, $1, and 8% respectively. This gives us PV of approximately $1.74.
These dividends are expected to grow at a rate (g) of 6 percent, starting from the third year. We can therefore use the Gordon growth model, which approximates the price of a dividend-paying stock: P = D3 / (r-g), where D3 is the dividend of the 3rd year, which is the dividend of the second year grown by g. This gives us P of approximately $36.67. To get the current stock price, we add the present values obtained from these two stages together, giving us a final value of around $38.41. Hence, the price of formulating Holmgren Hotels' stock should be approximately $38.41 today.
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