Answer:
FCFE: 99
Explanation:
FCFE: cash flow from operation - CAPEX + borrowing
we calcualte the cash flwo form operation using the indirect method:
net income - preferred dividends = available for common stock
income = 125 + 14 = 139
net income 139
depreciation expense 50
change in working capital (30)
cash flow from operation: 159
CAPEX will be the long term assets investment
investment on fixed capital<u> 100 </u>
CAPEX 100
net borrowing 40
159 -100 + 40 = 99
Answer: $40
Explanation:
First find the required return using CAPM;
Required return = Riskfree rate + beta * (Market return - riskfree rate)
= 6% + 0.5 * (13% - 6%)
= 9.5%
Then use DDM to determine intrinsic value;
= Next dividend / (Required return - growth rate)
= 5 / (9.5% - (-3%))
= $40
Answer:
D. Stocks are good for income while bonds are good for long-term growth.
Explanation:
A Stock is the smallest unit of a corporation. A stockholder is one of the owners of a corporation. Should the corporation makes profits, stockholders are entitled to dividends. Stocks are traded in the exchange markets. When the market or the corporation is doing well, stock price increases representing a capital gain to the shareholders.
Bonds are debts instruments that governments and corporates use to raise capital. They present long term investment opportunities to investors. Bonds offer regular and fixed interest payments to investors until maturity.
Stocks are riskier than bonds. Stock prices experience volatility as they trade every day. Their prices are likely to rise when the markets are favorable, which means profits to investors. Bonds are less risky and offer stable incomes for the long term.
Answer:
Theory Y views
Explanation:
According to McGregor, managers who subscribe to the theory Y assumptions have an optimistic view of their employees. They regard employees as intelligent and innovative people who can provide solutions to the organization's problems. Theory Y managers appreciate employee differences, encourage them to improve their skills and work rate.
<u>Assumptions of Theory Y include</u>
- Employees are happy to work on their initiative.
- Workers like to be involved in decision making.
- Workers are self-motivated and like to complete their tasks.
- Employees willingly seek and accept responsibility
- View work as fulfilling and challenging.
- Have the ability to solve the organization's problems creatively and innovatively.
