Answer:
Cost of equity = 11.20%, Value of Equity = $39.25
Explanation:
a. Cost of equity = Rf + B(Rm-Rf)
Cost of equity = 4% + 1.2(6%)
Cost of equity = 4% + 7.20%
Cost of equity = 11.20%
b. P/E ratio = 20
Market Price / EPS = 20
Market Price = EPS * 20
-->P1 = $2.17 * 20 = $43.40
DPS1= $0.24
Value of Equity = P1/Cost of Equity + DPS1/Cost of equity
Value of Equity = $43.40/1.1120 + $0.24/1.1120
Value of Equity = $39.03 + $0.22
Value of Equity = $39.25
Answer:
Education demand is elastic as compared to salt demand which is highly inelastic.
Explanation:
Elasticity of demand is a measure of the responsiveness of the demand of a good or service relative to it's corresponding change in price. A demand curve can be used to determine the degree of elasticity. A demand curve is a graphical representation of how price varies with quantity of goods and services demanded. The quantity of goods demanded is plotted on the horizontal axis of the graph with the corresponding price plotted on the vertical axis of the graph. With the graph, the elasticity of demand can be calculated. The formula for determining elasticity for demand is;
ED=Q/P
where;
ED=elasticity of demand
Q=percentage change in quantity demanded, where
Q={(Q2-Q1)/Q1}×100
Q2=quantity demanded when price is P2
Q1=quantity demanded when price is P1
P=percentage change in price, where;
P={(P2-P1)/P1}×100
P2=final price
P1=initial price
The formula above can be used to determine the degree of elasticity of a good or service as shown;
If the price elasticity of demand is greater than 1, then the demand is elastic. Meaning the demand is very sensitive to changes in price. This usually happens on goods and services that are wants rather than needs. Wants are luxuries that most people can do without or can find cheaper alternatives while needs are goods that most people can't do without.
If the price elasticity of demand is less than 1, then the good or service is inelastic. Meaning the demand is not very sensitive to changes in price. This usually happens on goods and services that are needs. Needs are goods and services that most people cannot do without.
In our case, salt is a need that most people cannot do without, therefor inelastic. However, quantity of education in private universities is highly elastic since there are many alternatives like public universities that are much cheaper compared to private universities. So a change in price will affect the quantity of demand.
Answer:
Equity financing
Explanation:
Equity financing is the kind of financing, which involves or comprise of a procedure for raising the capital or funds by the sale of the shares. The companies raise the money because they have a short term need in order to pay the bills or might have a objective and needs the funds or money to invest for the purpose of growth.
So, in short, it is a form or kind of financing which comprise of raising the funds or money by selling the shares or stock in a business.
Under this case, the Navim used the equity financing as he sold the stock of the company to investors in order to finance.
It is given that Joseph purchased 100 shares of ABCD Growth Fund for a price of $10.00 per share with a total investment of $1,000. At the end of the year he sold his investment for $11.20 per share. Find the total capital gain.
To get the capital gain, compute the total price in which Joseph sold his investment.
$11.20 x 100 = $1,120
Subtract the answer to the total price bought by Joseph
$1,120 - $1,000 = $120
The total capital gain is $120
