Briefly discuss: price earning rastio, dividend valuation model and discounted cash flow methods. Practical problems associated with using valuation approaches.
Q: Suppose AE = 20 - 500r +0.5Y, potential (desired) output is 30 and current r = 0.02, then
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A: Sample means various elements selected from the population.
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Q: What is the value of year 2's output in real dollars?
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Q: What is the future value of $8600 a year for 32 years at 8.1 percent interest, compounded annually?
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Q: (a) Suppose that, in the p If we randomly sample each family size 1-4?
A: If in the population 25% of women have 1, 2, 3, and 4 children, respectively, and we randomly sample…
Q: Fill in the blanks. a. If one Canadian dollar equals $0.7 American, then one U.S. dollar equals $ b.…
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Q: d. What are the gains from trade? Loaves of bread Machines
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A: TRUE
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Q: what is the concept of fiscal policy?
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A: Comparative advantage is the capacity of a country to produce a good or service for a lower…
Briefly discuss:
Practical problems associated with using valuation approaches.
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- One of the approaches for the Southern Company to comply with the Clean Air Act is to adopt fuel-switching technology. Do you think this strategic flexibility would have value to Southern Companys shareholders? Why?Explain the principal problem involved in using a dividend valuation model to value companies that are of very large and mature.Lyft launched its IPO on April 1st 2019 with a share price of $72. Before the IPO, Lyft’s board of directors was likely trying to decide how to compensate CEO Logan Green to provide an incentive for him to increase the firm’s performance and share price after it went public. Let’s say the board was considering two possibilities such that they were deciding between providing one million dollars worth of shares of the firm stock at $72 per share or one million dollars worth of call options with a strike price of $72 and a maturity and vesting date one year after the IPO. To keep things simple, let’s say CEO Logan Green can choose between providing two levels of effort: regular effort or high effort. He has been exerting regular effort all along. He could switch to high effort which would be much more costly for him as he would have to work even longer hours, but the extra effort would likely result in better performance for the firm. The goal of the board’s incentive compensation is to…
- How would each of the following changes tend to affect the average dividend payout ratios for corporations, other things held constant? Explain your answers. a.An increase in the personal income tax rate that is applied to dividends. b.A rise in interest rates. c.A decline in corporate investment opportunities. d.Permission for corporations to deduct dividends for tax purposes as they now can do with interest chargesWhat is the Related Diversification of Alibaba Group: The Rise of a Platform Giant?Discuss the limitations of the dividend share valuation model for well established firms which have been listed on a stock exchange for many years.
- Semi-Salt Industries began its operation in 1975 and remains the only firm in the world that produces and sells commercial-grade polyglutamate. While virtually anyone with a degree in college chemistry could replicate the firm’s formula, due to the relatively high cost, Semi-Salt has decided not to apply for a patent. Despite the absence of patent protection, Semi-Salt has averaged accounting profits of 5.5 percent on investment since it began producing polyglutamate—a rate comparable to the average rate of interest that large banks paid on deposits over this period. Do you think Semi-Salt is earning monopoly profits? Why?One CEO justified the merger of his soft-drink company with a machine tool company inthe following manner. This is a great merger. First the products are unrelated. This out company’searnings volatility is likely to decrease. Second, our management team has proven that we are bettermanagers than the former management team of the tool company, and this we are likely to discovernew way to create and capture value within the tool company. Evaluate this explanation for themerger.In the context of Initial Public Offerings (IPO), what is the main drawback of the book-building process? A. The fact that it may lead to overpricing of the company's shares B. The fact that the share allocation process is not transparent and may lead to quid-pro-quo and other forms of collusion between institutional investors and underwriters C. The fact that it may fail to attract institutional investors, thus leaving the company with few or no institutional analysts to issue recommendations on the company's shares D. The fact that the IPO may fail due to lack of venture capitalists backing
- what three factors would influence your evaluation as to wheter a company's current ratio is good or bad?Discuss whether environmental sustainability matters in creating value for shareholders.Transfer pricing refers to A) the pricing system within a business to transfer intermediate products between its various divisions. B) a method MNCs use to avoid tax. C) a system of reducing the cost of selling stocks and shares incurred by firms. D) A and B..