Recall that an exchange rate is the price of one currency in another. For example, it may take US $1.35 to buy 1 British Pound. Also recall the interest rates affect exchange rates. What do you predict will happen to the foreign exchange rate if interest rates in the United States increase more than in the UK? (In other words, which currency will become stronger?) How would such a change affect US exports to the UK? Would it be less expensive for an American tourist to take a vacation to London after the interest rate change? Be sure to clearly explain and justify your reasoning.
Answers
Answer:
Exchange Rate and Interest Rate
1. If interest rates in the United States increase more than in the UK, the exchange rate of the US dollars will increase relative to the UK pounds, thus causing the UK pounds to become stronger than the US dollars.
2. US exports to the UK would become cheaper in UK.
3. It would be more expensive for an American tourist to take a vacation to London after the interest rate change because they would need more money to handle the differences.
Explanation:
Generally, higher interest rates in an economy offer investors some higher returns when compared to other countries. These higher interest rates attract foreign capital and cause the exchange rate to rise. When this happens, the cost of goods and services in the country with the higher interest and exchange rates. The opposite becomes the case when the interest and exchange rates are lower relative to other countries.
If interest rates in the United States increase more than in the UK, the United states currency would become stronger or appreciate against the British Pound.
As a result of the increase in the value of the US currency, export to the UK would decline because export would become more expensive. It would be less expensive for American tourist to take a vacation to London.
Exchange rate is the rate at which one currency is exchanged for another currency.
If interest rates in the United States increase more than in the UK, there would be an increase in foreign investments in the US. As a result, the demand for the dollar would increase and this would lead to an appreciation of the dollar against the GBP.
As a result of the appreciation of the dollar, export goods to the UK becomes more expensive and imports to the US from the UK becomes cheaper.
To learn more, please check: https://brainly.com/question/14039990
Related Questions
the new ceo of an online music company determines that the company will continue selling subscription services, but it will also design a website that appeals to nonsubscribers.
Answers
The new CEO of an online music company determines that the company will continue selling subscription services, but it will also design a website that appeals to nonsubscribers for the organizing.
The subscription services is the services in which the company like music company which is selling their products or services and the company collects the revenue for the continue the operational business process that products or services.
The CEO of an online music company design a website that appeals to nonsubscribers for the organizing data to get better now about the individual why they are not taking subscription service and how many days they steak with their music company.
To know more about subscription services here,
https://brainly.com/question/22590704
#SPJ4
At December 31, 2020 Bramble Corp. had 298000 shares of common stock and 9800 shares of 6%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2020 or 2021. On January 30, 2022, prior to the issuance of its financial statements for the year ended December 31, 2021, Bramble declared a 100% stock dividend on its common stock. Net income for 2021 was $1143000. In its 2021 financial statements, Bramble's 2021 earnings per common share should be
Answers
Answer:
the earning per common share is $3.83 per share
Explanation:
The computation of the earning per common share is shown below
= Net income ÷ weighted number of outstanding shares
= $1,143,000 ÷ (298,000 shares)
= $3.83 per share
We simply divided the net income from the weighted number of outstanding shares so that the earning per share could be determined
hence, the earning per common share is $3.83 per share
Swifty Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $159,400, and purchases for January through April totaled $504,000. Sales revenue for the same period was $671,100. Swifty’s normal gross profit percentage is 35% on sales.
Using the gross profit method, estimate Swifty’s April 30 inventory that was destroyed by fire.
Answers
Answer:
$226,000
Explanation:
Ending Inventory As of April 30, is the ending inventory from January to April.
Opening inventory = $159,409
Purchases = $504,000
gross profit =35% of $671,100
=0.35 x 671,000
=234,000
cost of goods sold = revenue - gross profit
=$671,100 - $234,000
=$437, 000
cost of goods sold = opening inventory + purchases- ending inventory
=$437, 000= $159,409 + $504,000- ending inventory
=$437,000= $663,409- ending inventory.
Ending inventory = $663,409 - $437,000
=$226,000
assuming the prices of resoures a and b are 5 and 8 resoectively when the firm hires the profit maximizing combination of resources its ecnomomic profit will be 138 170 145 76
Answers
When the company hires the mix of resources that will increase profits by 5 and 8 respectively, its economic profit will be 145.
What is meant by profit maximization?In order to increase their returns, firms must ensure that the best levels both output and prices were realized through the process of profit maximizing. For the purpose of achieving its profit goals, the corporation alters crucial factors such as sale price, cost of production, or output levels. When marginal revenue equals marginal cost, or when MR = MC, a fully competitive firm will make the decision that will maximize its profits.
Why is profit maximizing important and what are the three conditions of profit maximization?Profit maximization is indeed a tactic that can encourage efficient and long-term company growth. If you're prepared to expand your business, a maximizing profit strategy will ensure that more work yields better net revenue.
Cost price p must match market value (MC). At q0, the marginal cost must not be decreasing. In order for the business to continue producing goods, the cost price must be higher than the average variable cost (p > AVC) in the short term and higher than the average cost (p > AC) in the long term.
To know more about Profit Maximization visit:
https://brainly.com/question/17233964
#SPJ4
Urgent Corporation had earnings per share of $4 last year, and it paid a $2 dividend.
Total retained earnings increased by $12 million during the year, and book value per
share at year-end were $40. Urgent Corporation has no preferred stock, and no new
common stock was issued during the year. If Argent’s year-end debt (which equals its
total liabilities) was $120 million, what was the company’s year-end debt/assets ratio?
Answers
Which question can best help a consumer assess risk when purchasing insurance? How much must be paid to make a claim? What problems are most likely to happen? What are the possible payouts on a claim? How much are the monthly premiums?
Answers
Answer: the answer is : What problems are most likely to happen?
Explanation:
Answer:
b
Explanation:
A company's_______ tells you how much money the company has left over after subtracting all expenses. *
a) Net Profit
b) Gross Profit
c) Revenue
d) Cost Of Goods Sold (COGS)
Answers
Answer:
net profit
Explanation:
net profit is the money left after all cost are deducted
Answer:
D: COGS
Explanation:
A company's COGS tells you how much money the company has left over after subtracting all expenses
Tran, who was born in Vietnam, now lives in Los Angeles. She applies to be a waitress at Hooters. The manager of Hooters restaurant tells her, “Sorry, we rarely hire Asian girls because their breasts are too small and part of the Hooters’ image is waitresses with big breasts”. Does Tran have a valid claim against Hooters under the Civil Rights Act? Explain.
Answers
Answer:
No
Explanation:
The are objectifying her based on her body not restricting her freedom of speech or anything like that. PS. Who wrote that question just why why
According to most large company CFOs, SOX has
Answers
Answer: increased investor confidence
Explanation: accounting
PLEASE HELP I NEED TO RAISE THIS GRADE
Answers
Answer:
I think it is the last one.
Explanation:
Hope this helped Mark BRAINLEST!!!!
If I travel to New York City from Boca Raton every weekend for 10 years, I am still considered a tourist in New York City.
Answers
Answer:
Yes
Explanation:
Yes, in any State or Country that you are not a permanent resident in you would be considered a tourist. In this scenario, you are a permanent resident of Boca Raton, Florida and only visiting New York City on weekends. Regardless of how frequent, since you are not a permanent resident and only travel on weekends to see the city or have fun then in the eyes of the law you are technically a tourist in the city.
Based on this chart, what is the marginal revenue, in dollars, at quantity three jackets?
Answers
Based on the information, the Marginal revenue at quantity 3 will be $16.
How to calculate the valueThe marginal revenue at quantity three jackets is $16. This can be found by looking at the difference between the revenue generated by selling three jackets and the revenue generated by selling two jackets. The revenue generated by selling three jackets is $48, and the revenue generated by selling two jackets is $32. The difference between these two values is $16, which is the marginal revenue at quantity three jackets.
Here is a breakdown of the calculations:
Revenue generated by selling 3 jackets = $48
Revenue generated by selling 2 jackets = $32
Marginal revenue at quantity 3 = $48 - $32 = $16
Learn more about revenue on
https://brainly.com/question/13444663
#SPJ1
You are holding a stock that has a beta of 1.39 and is currently in equilibrium. The required return on the stock is 20.47%, and the expected return on the market portfolio is 16.50%. What would be the expected return on the stock if the expected market return increased to 21.00% while the risk-free rate and beta remained unchanged
Answers
Answer: 26.73%
Explanation:
You can calculate the expected return using the Capital Asset Pricing Model (CAPM).
Formula is:
Expected return = Risk free rate + beta * (Market return - risk free rate)
Use the previous figures to solve for the risk free rate:
20.47% = Rf + 1.39 * (16.50% - Rf)
20.47% = Rf + 22.935% - 1.39R
20.47% - 22.935% = Rf - 1.39Rf
-2.465% = -0.39Rf
Rf = -2.465% / -0.39
= 6.32%
New expected return is:
= 6.32% + 1.39 * (21% - 6.32%)
= 26.73%
what is the minimum wage for SA
Answers
the new National Minimum Wage for South Africa has been made public by the Department of Employment and Labour. Starting on March 1st, 2023, the current minimum wage of R23,19 per hour will increase to R25,42 per hour (an increase of around 9,6%).
The minimal amount of compensation that an employer is compelled to pay wage earners for the job completed during a particular period, which cannot be reduced by a collective agreement or an individual contract, is referred to as the "minimum wage."The South African government may impose penalties on employers who fail to pay the minimum wage. If a defined weekly wage is used, the monthly wage is multiplied by 4.33. If an hourly rate is specified, it is computed as 4.33 times the weekly average.
Learn more about minimum wages here:
https://brainly.com/question/29128876
#SPJ1
Suppose that the change in a product's price is 10%, and this causes an 8% change in quantity demanded. The product's demand elasticity is
Answers
The concept of demand elasticity is crucial for understanding the relationship between changes in price and changes in quantity demanded of a product.
In this scenario, we are given that the change in the price of a product is 10%, and this leads to an 8% change in the quantity demanded. We can use this information to calculate the product's demand elasticity.
Demand elasticity is the measure of the responsiveness of the quantity demanded of a product to changes in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. Therefore, in this scenario, the demand elasticity can be calculated as:
Demand elasticity = (% change in quantity demanded) / (% change in price)
Demand elasticity = (8% / 10%)
Demand elasticity = 0.8
The demand elasticity in this scenario is 0.8, which means that the product's demand is relatively inelastic. Inelastic demand means that changes in price have a relatively small impact on the quantity demanded of the product. This is because the percentage change in quantity demanded is less than the percentage change in price.
Overall, understanding the concept of demand elasticity is essential for businesses to make informed decisions about pricing strategies. In this scenario, the product's relatively inelastic demand suggests that changes in price may not have a significant impact on the quantity demanded, and businesses may need to consider other factors when deciding on pricing strategies.
Know more about Demand elasticity here:
https://brainly.com/question/1048608
#SPJ8
Which form of ownership generally has the least ability to accumulate capital? Partnership Sole proprietorship Corporation S-corporatio
Answers
Answer:
Option B (Sole proprietorship) is the right option.
Explanation:
A single trader, as well as an entrepreneur, seems to be an unaccompanied undertaking with only one manager paying payroll taxes even more on profit derived from such an undertaking, would be considered as Sole proprietorship.Considering the lack of state intervention, cooperatives are simple to configure as well as deconstruct or popularize among very small company owners including construction company groups.Other provided options aren't related to the given scenario. So option B is the correct one.
Three levels of help human services organizations to achieve goals they develop for their clients.
Answers
Answer:
The three levels of help human services organisations provide are Macro, Mezzo and Micro.
Explanation:
Macro Level
This is focused on a higher scale and includes work like program development, community-based initiatives, policy changes etc. The type of organisations working at this level includes government agencies, non-profit companies and/or advocacy groups.
Mezzo Level
This is concentrated on a intermediate scale involving smaller groups. Examples of such practices includes helping those who are victims of criminal activity.
Micro Level
This type of work is focused on individual levels like helping people to provide them with their basic needs like food, clothes and/or home. This also includes work like counselling and family therapy.
Answer:
I think the answer may be:
Three levels of intervention help human services organizations to achieve goals they develop for their clients
Explanation:
I'm not even 100% positive about this, but I saw this answer on another site!
Charhofe ended 2019 with a balance in their interest payable account of $14 million. During 2019 it paid $9 million in interest to its creditors. What was the balance of the interest payable account at the end of 2018?
Answers
$23 million was the balance of the interest payable account at the end of 2018.
What is interest payable journal entry?Interest Payable is the amount of expense incurred but not paid as of today. If interest is accrued after the date the interest payable is registered on the balance sheet, it is not considered.
Given
interest payable account balance in 2019 = $14
Payment made during year = $9
Required to Calculate interest payable account at the end of 2018 =?
interest payable account 2018 = $14 + $9 =$23
Thus, the $23 million was the interest payment account in 2018. Interest Payable is a balance-sheet liability account that represents the number of financing costs that have accrued but have not been paid as of the balance sheet date. In a nutshell, it represents the amount of interest owed to lenders at the time.
Learn more about interest payable here:
https://brainly.com/question/24317224
#SPJ9
With evidence-based decision-making, managers are encouraged to rely on data and information rather than their intuition. True or false
Answers
Answer:
True
Explanation:
Evidence-based decision-making is an approach to decision-making that states that managers should systematically collect the best evidence available to help them make effective decisions. ... With evidence-based decision-making, managers are encouraged to rely on data and information rather than their intuition.
QUESTION 5
Which of the following is the first step in building a social media plan?
O a. Listen to determine opportunities
O b. Establish social media objectives
O c. Select social media tools
O d. Segment and target the social media customer
e. Integrate the plan
Answers
The first step in building a social media plan is to establish social media objectives.
Social media play an important role when it comes to advertising or marketing of goods or services.
In order to build a social media- plan it is important that you establish your social media objectives and know your goals as well as how to achieve it.
Some of the social media- plan objectives you need to know includes:
How to build rapport with your target audience or customers.How to convince your target audience about your products.How to create product awareness so as to increase your sales and earn profit.How to increase your audience.Inconclusion the first step in building a social media plan is to establish social media objectives.
Learn more about social media objectives here:https://brainly.com/question/13992388
The change in technology and the globalization have brought new pattern of organizing
today's companies, and thus, the managers need to consider these new concepts in
organization's design process. With this statement, discuss the emerging issues in
organization design and architecture.
Answers
Following are the emerging issues in organization design and architecture:Technology and Globalization, Customer Relations,Technical Knowledge, Flexibility, Employee's Well-being.
Following are the emerging issues in organization design and architecture:
Technology and Globalization: The modern era's rapid technology and globalization have forced the organizations to adopt a new pattern of organizing. Managers are focusing more on technology and globalization and they are ensuring that the company can cope with the emerging challenges.Customer Relations: Customers are the major driving force in every business. To maintain the customer base, the managers need to focus on customer relations as the organization's design process should be centered around their needs. This will help the managers in creating a company that provides excellent customer service to its customers.Technical Knowledge: The success of an organization depends on the technical knowledge of its managers. Managers need to have knowledge about new and emerging technologies so that they can use them to enhance the organization's capabilities. In addition, managers need to know how to apply this technical knowledge to improve the organization's structure and operations.Flexibility: Flexibility is a crucial component in the organization's design process. The managers need to design the organization that is flexible enough to adapt to new changes and technologies. This will help the managers in keeping up with the rapidly changing business environment.Employee's Well-being: The well-being of employees is also a significant issue in the organization's design process. The managers need to design the organization in a way that the employees can work efficiently, and their personal needs are also met. This will help in improving the employee's productivity and motivation level and ensure their loyalty to the organization.For more such questions on Globalization
https://brainly.com/question/9761659
#SPJ8
How do I get gud at craft
Answers
Answer:
practice at least two times per day
Answer: 90% of people marry there 7th grade love. since u have read this, u will be told good news tonight. if u don't pass this on nine comments your worst week starts now this isn't fake. apparently if u copy and paste this on ten comments in the next ten minutes you will have the best day of your life tomorrow. you will either get kissed or asked out in the next 53 minutes someone will say i love you.
Explanation:
g Assume you just purchased 100 shares of Apple stocks at $300. You are worrying that the competition from other tablet PC and smart phone producers will have a negative impact on Apple stock prices in 1 month. Generally speaking, you are still quite bullish on Apple stock. In order to hedge against this downside risk, you establish a protective put position by buying a put option contract with around 1-month maturity on Apple stock. However, the premium of the put option with strike price at $300 is $12, which is quite expensive. If you feel purchasing the put option with strike price at $300 and $12 premium is too expensive, what else can we do to reduce the cost of protective put position
Answers
Answer:
Buy at a lower strike put option or sell at a higher call option
Explanation:
100 shares of apple stock bought at $300
premium of put option ( cost ) = $12
Put option = $300
What can be done to reduce the cost of protective put position
To reduce the cost we can either buy at a lower strike put option or sell at a higher call option
Buying at a lower strike put option price ( < $300 )
This way premium will be reduced but this will not hedge against small fall in price
Sell at a higher call option
This way the premium charged will be reduced but if the price rises above the entry price on expiration then the gains made above the price will be foregone .
In 2006, Atlanta once again hosted the Peachtree Road Race, a running event that attracts many world-caliber racers. This year race officials also sanctioned a race conducted in Iraq so that soldiers from the state would not have to miss the annual event. The winners of the Mideast race as well as scenes of the actual race were televised. In terms of a promotional mix, this Iraqi Peachtree Race was as example of:
a. advertising and personal selling efforts.
b. strategic product promotions and resulting sales.
c. a target marketing strategy.
d. sales promotion efforts.
e. a public relations strategy and resulting publicity
Answers
Answer:
The correct answer is: e. a public relations strategy and resulting publicity.
Explanation:
In the scenario exemplified above, it can be considered that in terms of the promotional mix, the Iraqi Peachtree race was an example of a public relations strategy, as the function of these professionals is to promote an event, brand or company with the objective of attracting positive publicity. , which was what happened in the case of the race.
Public relations activities helped to generate publicity for the event through television media reports.
1. Discuss the various system for internal administration for financial organisation.
Answers
Financial organizations implement various internal administration systems like AIS, ERP, budgeting systems, TMS, risk management systems, and DMS to enhance efficiency, accuracy, and control over financial operations.
Financial organizations implement various systems for internal administration to streamline their operations and ensure effective financial management. Here are some key systems commonly utilized:
Accounting Information System (AIS): AIS is a comprehensive software system that enables financial organizations to record, process, and report financial transactions. It helps automate tasks such as general ledger management, accounts payable/receivable, financial reporting, and budgeting.
Enterprise Resource Planning (ERP) System: ERP systems integrate various departments and functions within a financial organization, including finance, human resources, procurement, and customer relationship management. By consolidating data and workflows, ERP enhances efficiency, collaboration, and data accuracy.
Budgeting and Financial Planning System: This system assists in creating and managing budgets, financial forecasts, and strategic planning. It enables organizations to allocate resources, track expenses, monitor performance, and make informed financial decisions.
Treasury Management System (TMS): TMS focuses on optimizing cash and liquidity management, risk management, and investment strategies. It facilitates efficient cash flow management, bank reconciliation, debt management, and compliance with regulatory requirements.
Risk Management System: Financial organizations employ risk management systems to identify, assess, and mitigate various types of risks, such as credit risk, market risk, operational risk, and regulatory compliance.
These systems enable organizations to implement risk mitigation strategies, monitor risk exposures, and maintain regulatory compliance.
Document Management System (DMS): DMS centralizes the storage and retrieval of financial documents, such as contracts, invoices, and financial reports. It ensures document security, version control, and easy access, facilitating efficient document management and audit trails.
For more such question on management. visit :
https://brainly.com/question/1276995
#SPJ8
Complete the following sentence.
Today, marketing strategies are generally divided into two sectors: inbound and
Answers
Answer:
Today, marketing strategies are generally divided into two sectors: inbound and
outbound.
Explanation:
Marketing strategies are broadly divided into two. One is inbound marketing strategy, which aims to attract customers, who have already indicated interest in an entity's products and services. They are already out there trying to reach out to the entity in order to satisfy their needs. As a marketing strategy category, it utilizes pull marketing activities to create brand awareness and attract willing new customers, including content, blogs, events, search engine optimization (SEO), and social media marketing. Outbound marketing strategy uses push marketing activities to chase customers. For example, it uses TV, radio, and other media ads, trade shows, cold calling, and cold emails.
4. What was the closing price of the corporation on July 26th?
Answers
The closing price of a security, such as a stock or a commodity, is the final price at which it was traded on a particular trading day. The calculation of the closing price depends on the market in which the security is traded.
What is closing price?If you have access to the historical data of the security, you can easily calculate the closing price by finding the last recorded price of the security on a given trading day. Many financial websites and data providers offer this information in their daily summary of a security's trading activity.
However, if you are looking to calculate the closing price in real-time, you can use a real-time data provider that offers the latest market quotes for the security you are interested in. The closing price is usually determined at the end of the trading day, which varies depending on the market and the security being traded.
In general, to calculate the closing price of a security, you need to find the last traded price of the security for the day. This information can be obtained from various sources, such as stock exchange websites, financial news websites, or real-time data providers. Once you have this information, you can use it to calculate the closing price of the security for that particular trading day. An overview was given.
Learn more about closing price on
https://brainly.com/question/30155035
#SPJ1
If $2,000,000 of 10% bonds are issued at 97, the amount of cash received from the sale is
a. $2,100,000
b. $2,060,000
c. $2,000,000
d. $1,940,000
Answers
The amount of cash received from the sale of $2 million bonds issued at 97% of face value is $1.94 million. The issue price is calculated by multiplying the face value by 97%, which is $1.94 million.
Hence, the correct option is (d).
To calculate the amount of cash received from the sale of $2,000,000 of 10% bonds issued at 97, we need to multiply the bond's face value by the percentage of the issue price.
The issue price is given as 97% of the face value. To find the issue price, we calculate:
Issue price = Face value x (97/100)
= $2,000,000 x (97/100)
= $1,940,000
Therefore, the amount of cash received from the sale is d. $1,940,000.
Learn more about bonds here: brainly.com/question/33648670
#SPJ2
Use the following data: Investment Assets at Year End $170,000 Investment Assets at Beginning of Year $125,000 Savings $25,000 Employer Match to 401(k) $4,800 Gross Income $120,000 Total Assets at Year End $650,000 Total Assets at Beginning of Year $610,000 Total Liabilities at Year End $235,000 Total Liabilities at Beginning of Year $240,000 What was the return on net worth for the year
Answers
Answer: 12.16%
Explanation:
Return on investment is used to know how efficient and investment is. Based on the information given in the question, the ROI will be:
ROI = [ending value of investments - (the beginning investment value + savings)]/ the beginning investment value
= $170,000 - ($125,000 + $25000 + $4800)/$125,000
= $170,000 - $154800/$125,000
= $15,200/$125,000
= 0.1216
= 12.16%
Assume that Botswana Life Insurance (BOTS LIFE) pays no cash dividends currently and is not expected to for the next 5 years. Its latest EPS was $10, all of which was reinvested in the company. The firm’s expected ROE for the next 5 years is 20% per year, and during this time, it is expected to continue to reinvest all of its earnings. Starting 6 years from now the firm’s ROE on new investment is expected to fall to 15% and the company is expected to start paying out 40% of its earning in cash dividends, which it will continue to do forever after. BOTS LIFE’s market capitalisation rate is 15% per year.
(a) Estimate the intrinsic value per share of the firm [7 Marks]
(b) Assuming its current market price is equal to its intrinsic value, using illustrations, what do you expect to happen to its price over the next year and the year after? [5 Marks]
(c) Illustrate, what effect would it have on your estimate of the intrinsic value if BOTS LIFE is expected to pay out only 20% of earnings starting in year 6? [5 Marks
Answers
The intrinsic value of company's share is $89.90
The share price is expected to rise in the incoming years
The intrinsic value of share remains the same when payout ratio reduces to 20%
What is the firm growth rate in each of the future years?
The growth rate of the company, which is also the growth rate for earnings per share in each of the first 5 years
Growth rate in the first 5 years=ROE*reinvestment rate
ROE=20%
reinvestment rate=100%(all earnings would be reinvested)
Growth rate in the first 5 years=100%*20%
Growth rate in the first 5 years=20%
Earnings in 5 years=current EPS*(1+growth rate)^5
Earnings in 5 years=$10*(1+20%)^5
Earnings in 5 years=$24.8832
Growth rate for year 6 and beyond=15%*(1-40%)
Growth rate for year 6 and beyond=9.00%
Earnings in year 6=$24.8832*(1+9%)
earnings in year 6=$27.122688
Out of the EPS, 40% would be paid as dividends
dividends in year 6=$27.122688*40%
dividends in year 6=$10.8490752
We can compute the share price at the end of year using the present value formula of perpetuity
share price in year 5=$10.8490752/(15%-9%)
share price in year 5=$180.81792
share price now=$180.81792/(1+15%)^5
share price now=$89.90
The fact that share price and the intrinsic value are the same implies that share price would increase over the next year and the year after because the dividends would continue to growth at a constant rate of 9%
Out of the EPS, 20% would be paid as dividends
dividends in year 6=$27.122688*20%
dividends in year 6=$5.4245376
growth rate=15%*(1-20%)=12.00%
We can compute the share price at the end of year using the present value formula of perpetuity
share price in year 5=$5.4245376/(15%-12%)
share price in year 5=$180.81792
share price now=$180.81792/(1+15%)^5
share price now=$89.90
The share price in payout ratio from 40% to 20% has no effect on the intrinsic value since the share prices are the same under the two scenarios
Find out more about intrinsic value on:https://brainly.com/question/14720349
#SPJ1