A fast growth share has the first dividend (t=1) of $1.20. Dividends are then expected to grow at a rate of 6 percent p.a. for a further 3 years. It then will settle to a constant-growth rate of 2.6 percent. . If the required rate of return is 13 percent, what is the current price of the share? (to the nearest cent)

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2) A new fast food restaurant opens in your town. A new book is released at the same time that exposes the high calorie contents of fast food. Draw and the graph and explain which curve shift first and, then what cause the second curve to shift. Final what happens to price and quantity at the nee equilibrium point?

Complete the following table: (Use Table 15.1) (Do not round intermediate calculations. Round your answers to the nearest cent.)

Company X just made a dividend payment of $0.50 per share. Investors expect the dividend to grow by 11% per year in the first two years and then by 3% per year starting in the third year. What's the maximum price investors are willing to pay for Company X's stocks if they require an annual return rate of 13%?

Lincoln Motors does not pay dividends currently but plans to pay its first dividend of $1.00 three years from today (D3). The dividend will grow at 10% in years 4 and 5 and after year 5 will grow at 3% forever. Find the price per share of Lincoln Motors if the required rate of return is 8%.

1.Marginal profit is equal to marginal revenue plus marginal cost.

True or false

Spacely Sprockets' short-run cost curve is C(q,K)=25q2K+15KC(q,K)=25q2K+15K, where q is the number of Sprockets produced and K is the number of robot hours Spacely hires. Currently, Spacely 2.hires 10 robot hours per period. The short-run marginal cost curve is MC(q,K)=50qKMC(q,K)=50qK. If Spacely receives $250 for every sprocket he produces, his profit maximizing output level is 50.

True or False

3.Consider a competitive market in which the market demand for the product is expressed as P = 75 - 1.5Q, and the supply of the product is expressed as P = 25 + 0.5Q. Price, P, is in dollars per unit sold, and Q represents the rate of production and sales in hundreds of units per day. The typical firm in this market has a marginal cost of MC=2.5+10qMC=2.5+10q.

In this case, the typical firm will maximize its profit at the point where MC = P =

True or False

4. Revenue is equal to price times quantity.

True or false

5. The table below lists the short-run costs for One Guy's Pizza. If One Guy's can sell all the output it produces for $12 per unit, One Guy's should produce 58 pizzas to maximize profits.

True or false

6. Producer surplus in a perfectly competitive industry is the difference between revenue and variable cost. True or false

7. he following table contains information for a price-taking competitive firm. The maximum profit is $13.

True or false

8. Average total cost for the firm in the following table is U-shaped.

True or false

9. Consider the following diagram, where a perfectly competitive firm faces a price of $40. At the profit-maximizing level of output, total revenue is $2,400.

True or false

In January 2009, Tom Sosa, the purchasing manager, received a telephone call from their Columbus, Indiana, diesel engine supplier informing him that effective June they were no longer producing the D-342 diesel engines at the Columbus plant. The D-342 engine sales were decreasing and would no longer be in their product line. Tom was in shock. He was now forced to deal with the sole supplier of the D-342 located in Portland, Oregon. The most recent price schedule submitted by the Oregon engine supplier is given below:

The prices had been basically the same as the Columbus supplier except that they are F.O.B. Portland. The traffic department informed Tom that the transportation cost per hundredweight is $10 for carload lots of 50,000 pounds. The less than carload rate is $15 per hundredweight. The replenishment cycle normally takes one week.

BACKGROUND

Tom Sosa, the supply manager for MARS, Inc. was contemplating several significant changes in the D-342 diesel engine market. Mr. Sosa was concerned because in its production of the 98-D loader, MARS used 10 diesel engines each working day of the month. (MARS operated on a 20-day-per-month schedule.) Each engine weighs 500 pounds. Engine orders are currently placed every Monday morning. For the past 10 years, the D-342 engines had been produced in only two locations in the United States, one in Columbus, Indiana, and the other in Portland, Oregon. Mr. Sosa felt fortunate that the Columbus producer was located approximately 30 miles from his facility. The Columbus supplier offered just-in-time delivery service at no charge to MARS.

MARS implemented lean manufacturing in 2002. The kanban-controlled JIT production system was implemented based on the premise of minimizing work-in-process inventories (waste) by reducing lot sizes in order to increase production efficiency and product quality.

ACTION TAKEN BY TOM

Mr. Sosa compiled cost and warehouse capacity data on the D-342 engine from the accounting department. See Table C17.1.

Mr. Sosa wonders what effects these new developments will have on his cost structure.

Assignment Questions

  1.  What were MARS’s total costs per year prior to the new price structure when the diesel engine price was $4,800? Was MARS using the EOQ method?

TABLE C17.1
Cost and Warehouse Capacity

2.   With volume discounts and warehouse constraints, what is the best ordering quantity?

XYZ stock price and dividend history are as follows:

An investor buys four shares of XYZ at the beginning of 2015, buys another two shares at the beginning of 2016, sells one share at the beginning of 2017, and sells all five remaining shares at the beginning of 2018.

a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2015, to January 1, 2018.

• Firms A & T are both 100% equity financed. Firm A can acquire firm T for K330,000 in the form of either cash or stock. The Synergy value of the deal is k60, 000.

• The following information relates to the two companies

                                                                               A                         T

No.of Shares                                                       50,000              25,000

Price per share                                                        K30                    k12

EPS                                                                              k3                        k3

Market value                                               k1,500,00           k300,000

P/E         Ratio                                                         10X                     4X

Required:

1. What is the merger premium in percentage over firm T’s stock

2. if based on market price per share, would the merger happen on cash or stock basis

3. Calculate the NPV of the Merger based on Cash or Stock basis

4. Calculate the Post Merger Earnings per share for the firm.