Answer:
D. 14.25
Explanation:
Data provided as per the question below:-
Marginal Propensity to Save = $87.00
Earnings per share = $6.10
The computation of price earning ratio is shown below-
Price earning ratio = Marginal Propensity to Save ÷ Earnings per share
= $87.00 ÷ $6.10
= 14.25
Therefore for computing, the we simply applied the above formula.
Well you can ask yourself which of these answers have to do with having a flexible mind. I would say having a flexible mind
helps you become a team player
because in order to work with other people you must have a flexible mind.
Answer:
$3,997
Explanation:
As we know that
Total profit = Total revenue - total cost
where,
Total revenue = Output sells for × quantity sold
= $20 × 499 units
= $9,980
And, the total cost is
= Total cost at 500 units - marginal cost of the 500th unit
= 500 units × $12 - $17
= $6,000 - $17
= $5,983
So, the total profit is
= $9,980 - $5,983
= $3,997
Answer:
Using the discount cash flow model to value the company, we can say that the company is worth $85 million / 12% = $708.33 million
Each stock should be worth approximately $708.33 million / 100 million = $7.0833 per stock
If the company uses the cash to finance new projects, then future cash flows should be approximately $97.75 million, and the company's value = $97.75 million / 12% = $814.583 million. This represents a 15% increase in value. The stock price should also increase by 15% to $8.1458 per stock.
If the company instead decides to repurchase stocks using all the cash, then it could repurchase 35.29 million stocks. Since we are assuming that the company's future cash flows wouldn't be affected by this decision, then the company's total value will still be $708.33 million, but each stock would be worth much more = $708.33 / 64.71 million stocks = $10.95. This represents a 34.36% increase with respect to the other alternative of investing the cash.
The issue here, is that this situation is not very realistic. It is not normal for a company to use all of its cash to repurchase stocks since it would result in a huge increase in stock prices (stock prices are set by supply and demand). Also, this would also result in a sharp increase in the cost of equity due to higher risks.
