The opportunity cost amounts to $532,000. This represents the cost of the most preferable alternative that was not selected. In this case, rejecting the investment project meant foregoing the potential return of $532,000.
Answer:
P14 = $55.69545045394 rounded to $55.70
Explanation:
The dividend discount model (DDM) based on constant growth can help determine the current stock price. It assesses a stock’s price using the present value of the anticipated future dividends. The formula for determining today's price with a constant growth DDM is,
P0 = D1 / (r - g)
Where,
- D1 represents the expected dividend for Year 1 or the following year
- g denotes the constant growth rate for dividends
- r signifies the discount rate or the required rate of return
To find the stock price today, we will utilize the dividend expected in Year 1. Consequently, to compute the stock price 14 years into the future, we calculate D15. D15 can be figured out as follows,
D15 = D1 * (1+g)^14
D15 = 0.50 * (1+0.09)^14
D15 = $1.67086351362 rounded to $1.67
Now applying the DDM formula for the price,
P14 = 1.67086351362 / (0.12 - 0.09)
P14 = $55.69545045394 rounded to $55.70
Answer:
a) 120 skiers daily
b) 6.25% rise in revenue
Explanation:
a) Assuming each skier stays for an average of 10 days, the daily turnover corresponds to 1/10 of the total skiers, which results in 1200/10 = 120 skiers daily.
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b) For a duration of n days, the average expenditure for a skier is...
50 +(n-1)30 = 20 +30n
and the average daily spending calculates to...
(20 +30n)/n = (20/n) +30
Thus, for a 10-day visit, the average skiier's restaurant spending is...
20/10 +30 = 32.... each day
Similarly, for a stay of 5 days, the average skier's expense becomes...
20/5 +30 = 34.... each day
The anticipated change in restaurant revenue is...
(34 -32)/32 × 100% = 2/32 × 100% = 6.25%
Restaurant revenues are projected to increase by 6.25% from the previous year.
Response:
The yearly average return stands at 9.6 %
Clarification:
Calculating the average return
Assuming the price per share is 100
Initial Growth Final
Value % Value
Company A 50 % at 100 5,000 8 % 5,400
Company B 30 % at 100 3,000 12 % 3,360
Company C 20 % at 100 2,000 10 % 2,200
Total amounts 10,000 10,960
To find the average return, take the increase in value over the base, divided by the base
10,960 - 10,000 = 960/ 10000 = 9.6 % average return
