Answer:
Sid should buy the company
Explanation:
given data
dividend = $1.70 per share
constant rate = 5%
required return = 11%
growth rate increase = 6.5%
increasing the required return = 12%
solution
we get here intrinsic value of the company in both by use Gordon Growth Model that is here present value
PV = ( Do × (1 + g) ) ÷ (r - g) .......................1
here Do is current dividend and g is growth rate and r is required rate of return
so here put value in current case
PV = ( 1.7 × (1 + 0.05) ) ÷ (0.11 - 0.05)
solve it we get
PV = $29.75 .............................2
and
now put value for buying company case
so
PV = ( 1.7 × ( 1 + 0.065)) ÷ ( 0.12 - 0.065)
solve it we get
PV = $32.92 ..............................3
so Sid should go ahead buying the company
This consideration is related to the socio cultural environment:
a.) A new business decides to begin with the city its owners live in
since they are familiar with the local geography and tax issues.
Explanation:
The socio cultural environment one is familiar with influences them in many ways.
This also includes their choice of place for where they will start the business simply because they know that domain much more and it will be easier to be effective in there.
This is the reason that people are often told to be in their familiar turf.
The new business will be able to use its full contacts and have an insight on what works and what doesn't because they operate from their own area.
Answer:
there is a bigger money pool and became popular
A U.S. producer that exports merchandise made at its U.S. plants for shipment to outside markets becomes more focused in remote markets or in foreign markets when the U.S. dollar decreases in values against the currencies or money of the other nations or countries to which it is trading.
Answer:
D: increase investment projects by firms
Explanation:
When interest rates are lowered, it is a green signal for small and medium size enterprises to borrow money for their investment projects.
