Answer:
1. In order to estimate demand the analysts should;
Survey customersAdd up the total quantity demanded by the customers at each price pointScale up the quantities demanded by the survey respondents.Plot the demand curveWhen the analysts go into the market to research, they should start by surveying a sample of customers. They can then add up the quantity that was demanded by the customers at each price point to find out the total demand.
They should then scale up these results to see what the total market demand is. Then finally they should then use the scaled up data to construct a demand curve.
b. Two important factors
existing competition in the market - when creating demand estimates the analysts should keep in mind that they may have competition who are already selling their product. Their demand analysis should take into account factors like the people who have already bought the product and might no longer needing it or the price that the other competitors are selling at.consumer demographic information - demand also depends on demographic factors such as age and economic class. Some products are not very well used by the older generation such as smart watches so the researchers need to ensure that they have the right age groups. The watch might also cost an amount that some people cannot afford so this must be taken into account as well.The Tamarisk Heritage Centre (a not-for-profit organization providing language and arts and crafts programs for children) received a lump-sum grant from the City of Moncton of $483,820 this year. The fixed costs of the Centre are expected to be $239,800. The average variable cost per child visit is expected to be $8.70, and the average fee collected per child visit is $3.80.What is the breakeven volume in patient visits? (Round answers to 0 decimal places, e.g. 5,125.)
Answer:
48,939 patients
Explanation:
Breakeven quantity = fixed cost / price – variable cost per unit
$239,800 / ( $8.70 - $3.80) = 48,939 patients
Based on the data provided in the marketing dashboard, what type of promotional marketing effort, if any, should Kai invest in to increase the number of canine customers and profit
Answer: Coupon Direct Mail
Explanation:
From the information on the dashboard, Kai should invest in Coupon Direct Mail as a means of promoting the business. With this method, Kai attracts the highest number of clients at 150 per month which is larger than the other two methods.
Kai will also make the highest amount of profit of $2,000 using this method even after the costs of this method have been accounted for. The best option for Kai therefore is to use the Coupon Direct Mail promotional marketing effort.
All of the following statements regarding a business segment are true except:_______a. A business segment is a part of a company's operations that serves a particular product line. b. A segment has assets, liabilities, and financial results of operations that can be distinguished from those of other parts of the company. c. A company's gain or loss from selling or closing down a segment is reported separately The income tax effects of a discontinued segment are combined with income tax from continuing operations. d. A segment's income for the period prior to the disposal and the gain or loss resulting from disposing of the segment's assets are reported separately.
Answer: The income tax effects of a discontinued segment are combined with income tax from continuing operations.
Explanation:
A business segment is part of a company's operations which serves a particular product line and it should be noted that the segment has assets, liabilities, and financial results of operations which can be differentiated from those of other parts of the company.
The option that the income tax effects of a discontinued segment are combined with income tax from continuing operations is not true.
What does ASME Stand for
Answer:
American Society of Mechanical Engineers
Answer:
American Society of Mechanical Engineers
The time after your pitch deck presentation should be used for______.a. questions and answers.b. presenting other business ideas you have.c. giving participation gifts.d. you should leave once you have finished your pitch deck presentation
Answer:
a. questions and answers
Explanation:
A pitch deck is a presentation that is related for starting up your business so that the coming investors should know about your business. It involves various slides that help each and everyone to understand your business idea
It is a short summary that demonstrates the idea of your business, the vision of your startup
Now the time that is to be left after pitch deck presentation is generally to be used for questions and answering and the same is to be considered
Hence, the correct option is a.
Pfister corporation reports $582 million in net income. This is the amount of cash available to distribute to shareholders.a. Trueb. False
Answer: False
Explanation:
The Net Income also takes into account cash that has not been paid yet from credit sales as well as other non-cash expenses. It is therefore not a measure of how much cash is available to be distributed to shareholders.
The amount that represents the cash available to distribute to shareholders is called the Free Cash Flow to the Firm (FCFF) and accounts for the actual amount of cash available in the company for disbursement.
Makoto Corp. prepared the following reconciliation of income per books with income per tax return for the year ended December 31, 2021: Book income before income taxes 2,700,000 Add temporary difference Installment revenue which will reverse in 2022 240,000 Deduct temporary difference Depreciation expense which will reverse in equal amounts in each of the next four years (960,000) Taxable income 1,980,000 Makoto's effective income tax rate is 25% for 2021. What amount should Makoto report in its 2021 income statement as the current provision for income tax expense?
Answer:
Income tax expense 567,000 debit
income tax liability 151,200 credit
income tax payable 415,800 credit
Explanation:
Income before taxes: 2,700,000
unfavorale temporary difference 240,000
favorable temporary difference 960,000
taxable income 1,980,000
income tax payable : 1,980,000 x 21% = 415,800
income tax expense: 2,700,000 x 21% = 567,000
960,000 - 240,000 = 720,000 net
as we are paying fewer taxes now, we are going to pay more in the future.
Therefore, we have a tax liaiblity:
720,000 x 21 = 151,200
Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts.
A. On July 1, Roley purchased $60,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,200.
B. On July 3, Roley returned damaged goods and received credit of $6,000.
C. On July 10, Roley paid for the goods.
Prepare all necessary journal entries for Roley.
Answer:Please see answers in explanation column
Explanation:
1A)To record amount payable for purchase of goods
Date Account Title Debit Credit
July 1 Purchase $60,000
Accounts Payable $60,000
Freight in $1,200
Cash $1,200
B)To record amount on damaged goods
Date Account Title Debit Credit
July 3 Accounts Payable $6,000
Return of Purchase $6,000
C)Journal to record payment of goods
Date Account Title Debit Credit
July 10 Accounts Payable $54,000
Purchase Discount $1,080
Cash $52,920
Calculations
Accounts payable Purchased Price - price of returned goods = 60000-6000 = $54,000
Discount on Purchases if paid within 10 days = 2% x $54,000 = $1,080
If you cannot think of a better way to say what another author said, it is best to:_______.a. keep reading the passage until you can paraphrase.
b. quote the author, no matter how long or how often.
c. substitute a few words in the sentence for synonyms.
d. leave that source out of your paper.
Answer:
B.
Explanation:
Quoting can be defined as taking exact phrase or sentence from other text and adding it into one's writing.
Quotes are incorporated into a text when it is difficult to paraphrase the text. Sometimes paraphrasing the text also takes away the essence of the text, in the case also, the writer include the quote.
The rule of quoting a text is always to cite the source, the author, etc to avoid plagiarism.
So, the correct way to say what another author is saying without hampering the true message would be to include the author's quote (using correct citation format). Even the long quotes can be included and everytime the quote is included remember to cite it.
Thus the correct option is B.
Answer:
B. Quote the author, no matter how long or how oftenExplanation:
If there is not a better way to say what the author has said we should quote the text, reading the passage until you can paraphrase will not work if you cannot express the another author's ideas or text in your own words.
Substituting a few words won't be helpful either, as the other lines will be considered plagiarized. You also cannot leave the source out of paper, if you do so for a number of sources then it may affect the quality of your work.
Excess supply of a product exerts ___________pressure on prices
Answer:
Downward
Explanation:
This is situation is called Market Excess, its occurs when there is excess supply, that is quantity supplied is greater than quantity demanded. In this situation, consumers will be able to buy as much of a good as they would like because the prices will dive low.
Categorize which of the following questions are biased and which are unbiased. a. DO YOU SUPPORT CHANGING THE LAWS TOPREVENT PEOPLE FROM MAKING THEMSELVESAND OTHERS SICK BY SMOKING IN PUBLICPLACES?b. WHO DO YOU PLAN TO VOTE FOR IN THE NEXTPRESIDENTIAL ELECTION?c. ARE YOU ONE OF THOSE ANNOYING PEOPLEWHO LIKES POP SINGERS LIKE TAYLOR SWIFT?d. HOW MUCH WOULD YOU BE WILLING TO PAYFOR A NEW CAR?e. HOW MANY TIMES A WEEK DO YOU EAT REDMEAT FOR DINNER?
Answer:
A) Is a biased Question as contains an argument within the question.
It should simply be: Do you suport bannning public smoking?
B) Unbiased.
C) Biased. Contains harsh treatment agaisnt the person which is being asked. It should be: Are you a Taylor Switf fan?
D) Unbiased
E) Biased as implies the person already eat red meat in a weekly basis.
Do you eat read meat for dinner?
Then, the person should ask for how frequently
Explanation:
Biased questions: Inside the quesiton are element that may induct the person to respond in a certain way to avoid reprehension or support the beliefs of the person asking the question like:
misleading information, harsh treatment, arguments within the question or adjectivization
Would you rather be a juvenile prosecutor or defense attorney? Explain your decision.
Answer:
a defense attorney instead
Explanation:
From a financial standpoint, a defense attorney would more likely make more money than a juvenile prosecutor because a defense attorney could charge up more for certain cases than been a juvenile prosecutor who wants to ensure someone is convicted.
Also, in terms of purpose, I do feel a defense lawyer could make more impact socially by defending his or her clients.
During its 1st month of business, Noodlecake's cash increased by receiving $5,000 from issuing common stock to its owners, borrowing $2,000 from bank, and collecting $3,000 from its customers. Its cash decreased by paying $2,000 to its enmployees and suppliers and $3,000 for the purchase of equipment. On its statement of cash flows, Cash Provided by Operating Activities equals $______ Cash from Investing Activities equals $________ Cash from Financing Activities equals $_______ Be sure to use and the Change in Cash equals $_______ parentheses around the amount if it is a cash outflow, e.g. $(1,000)
Answer:
Noodlecake
On its statement of cash flows, Cash Provided by Operating Activities equals $__1,000____ Cash from Investing Activities equals $__(3,000)______ Cash from Financing Activities equals $_7,000______ and the Change in Cash equals $_5,000______ Be sure to use parentheses around the amount if it is a cash outflow, e.g. $(1,000)
Explanation:
a) Data and Calculations:
Financing activities:
Common stock $5,000
Bank loan 2,000
Net cash $7,000
Operating activities:
Cash from customer $3,000
Cash to employees (2,000)
Net cash $1,000
Investing activities:
Equipment ($3,000)
Net cash from cash flows = $5,000
The net cash from cash flows or the change in cash flows is the summation of the changes in the operating, investing, and financing activities of Noodlecake during the period under review. It shows by how much the cash has increased or decreased when compared to the beginning balance, which can be zero as in this case.
An analysis of the accounts of Roberts Company reveals the following manufacturing cost data for the month ended June 30, 2017 Inventory Beginning EndingRaw materials $9,180 $17,480Work in process 5,670 7,610Finished goods 9,300 6,430Costs incurred: raw materials purchases $55,020, direct labor $51,740, manufacturing overhead $23,300. The specific overhead costs were: indirect labor $6,510, factory insurance $4,700, machinery depreciation $4,380, machinery repairs $1,990, factory utilities $3,740, and miscellaneous factory costs $1,980. Assume that all raw materials used were direct materials.Prepare the cost of goods manufactured schedule for the month ended June 30, 2017
Answer:
cost of goods manufactured schedule
Raw Materials ($9,180 + $55,020 - $17,480) $46,720
Direct Labor $51,740
Manufacturing overheads :
indirect labor $6,510
factory insurance $4,700
machinery depreciation $4,380
machinery repairs $1,990
factory utilities $3,740
miscellaneous factory costs $1,980
Add Opening Work In Process $5,670
Less Closing Work In Process ($7,610)
Cost of goods manufactured $119,800
Explanation:
Cost of goods manufactured schedule shows a summary of results (cost) obtained from manufacturing activity during the production period.
Billy Penny is trying to determine how many units of two types of cordless telephones to produce each day. One of these is the standard model, while the other is the deluxe model. The profit per unit on the standard model is $90, while the profit per unit on the deluxe model is $120. Each of these requires 30 minutes of assembly time, while the Deluxe model requires 35 minutes of assembly time. The Standard model requires 10 minutes of inspection time, while the Deluxe model requires 15 minutes of inspection time. The company must fill an order for 6 Deluxe models. There are 450 minutes of assembly time and 180 minutes of inspection time available each day.
Required:
Formulate as an LP, solve using QM, then interpret your output.
Answer:
The optimal solution is 3 standard telephones and 10 deluxe telephones for a maximum profit of $1,470.
Explanation:
we have to maximize profit following the equation 90s + 120d
the constraints are:
30s + 35d ≤ 450
10s + 15d ≤ 180
d ≥ 6
s ≥ 0
using solver, the optimal solution is 3 standard telephones and 10 deluxe telephones for a maximum profit of $1,470.
we can check our solution:
(90 x 3) + (120 x 10) = 1,470
(30 x 3) + (35 x 10) = 440 ≤ 450
(10 x 3) + (15 x 10) = 180 ≤ 180
10 ≥ 6
3 ≥ 0
What type of contract is an agreement among persons to be governed?
Answer:
Social contract
Explanation:
The social contract is the contract which is made by the people who are living in a society in order to accomplish some task in terms of social benefits so that the everyone could get the benefit of it
Therefore in the given case, the social contract is an agreement that is made among the persons that should be governed and hence the same is to be considered
Yuri wants to pay for his new chair using a check. What must he consider before using that method of payment?
Yuri must check his credit history.
Yuri must know the interest rate on a furniture loan.
Yuri must be sure he has enough left in his checking account for any expenses and automatic payments.
Yuri must check his credit card balance.
Answer:
I think....... the answer is c...
Hope it helps
Before using a check as a method of payment for his new chair, Yuri must consider several factors to ensure a smooth transaction. Hence option D is correct.
What must he consider before using that method of payment?First and foremost, he should verify that the merchant accepts checks as a form of payment. Additionally, he should confirm that he has enough money in his checking account to cover the cost of the chair and any other expenses or automatic payments that may come due soon.
It's also important for Yuri to ensure that he writes the check properly, including the correct date, payee name, and amount in both numerical and written form. Failure to do so could result in the check being rejected or delayed, which could cause problems for both Yuri and the merchant.
If Yuri has a history of bounced checks or insufficient funds in his account, he may want to consider alternative payment methods or take steps to improve his financial situation before attempting to pay with a check.
It's also a good idea for Yuri to keep track of his checkbook balance and reconcile it regularly to avoid any surprises or overdraft fees.
Overall, paying with a check can be a convenient and secure way to make purchases, but it's important for Yuri to be mindful of these considerations to ensure a successful transaction.
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Here I am again but am really in the mood;) Easy question: What hobby do you have?
Which of the following best describes the primary role of auditors in financial reporting? A. Consultants that are hired by company management to advise on key matters related to competition, product pricing, employee retention, and financial reporting strategies. B. Key employees of the company that actively participate on the management team in strategic planning, product development, and financial reporting. C. Government employees assigned by local officials to ensure accurate financial reporting and operational integrity by the company. D. Independent party hired by management to express a professional opinion of the extent to which the company's financial reporting is in compliance with generally accepted accounting principles
Answer:
D. Independent party hired by management to express a professional opinion of the extent to which the company’s financial reporting is in compliance with generally accepted accounting principles.
Explanation:
I just finish my quiz on it.
'Auditors' are the 'individuals who conduct an independent review and examination of system records and activities in order to test the adequacy of the effectiveness of data security and processes.'
The statement that most adequately displays the central role of auditors in the 'financial reporting' would be:
D). "Independent party hired by management to express a professional opinion of the extent to which the company's financial reporting is in compliance with generally accepted accounting principles."
The responsibilities of an auditor include:
Review and monitoring of the financial records to prevent any discrepancy. Ensure that the organization follows all the standard principles and policies. Prevent it from any kind of fraud or risk. Assist in saving costs. Ensure the operations are being run effectively. Preparation of reports and data charts etc.Thus, option D correctly goes with the above-stated duties that he/she is an individual who looks after that the company is in proper alliance with the set principles.
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Which of the following is not an important question to ask when developing a data collection plan?
a. Who will be responsible for collecting the data?
b. What is the source of the data?
c. What is the reason for collecting the data?
d. Is it possible to make decisions without collecting data?
Answer:
d. Is it possible to make decisions without collecting data?
Explanation:
There is no need for such a question since you are already requested to begin developing a data collection plan.
However, questions related to who will be responsible for collecting the data are important as they enable you to properly plan. Also, knowing the source of the data and the reason for collecting the data are important questions.
Data collection plan is used to collect data in order to make decision while collecting the data, one should not ask whether the decision can be taken without collecting data.
What is a data collection plan?It is a thoughtful approach used to collect the baseline data as well as data which guides to the root cause. The plan includes questions like: How, When, Where and From whom the data is collected.
The questions not asked while developing a data collection plan is whether it's possible to make decisions without collecting data.
Therefore, option d appropriately describes the above statement.
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Money is a crucial component of any presidential campaign.
Where do campaign funds come from?
Answer:
donors and from the contestant's personal funds
Explanation:
Remember, a campaign (political campaign) is a carefully planned activity with the sole aim of influencing the majority of the citizens qualified in a particular election to vote for a specific candidate.
Thus, there are planned fundraising events in which donors (members of the public, and organizations) contribute financially towards a presidential campaign. Also, the contestant may use his own funds to finance his campaign.
Jack receives a check from Kappa Company and indorses it "without recourse." This indorsement is:______.a. a blank indorsement.
b. a qualified indorsement.
c. a restrictive indorsement.
d. a special indorsement.
Answer:
b. a qualified indorsement.
Explanation:
Jack receives a check from Kappa Company and indorses it "without recourse." This indorsement is known as a "qualified indorsement".
In a qualified indorsement, the liability is usually disclaimed by the indorser when a phrase is added preceding the signature.
The qualified indorsement gives the indorser the ability to include "without recourse" which eventually relieves the indorser of any payment responsibility. During settlement of claims, Attorneys who collect checks from their clients usually sign using "qualified endorsements"
An investor purchases an original issue discount general obligation municipal bond (OID) on the offering and holds it to maturity. The IRS treats the accretion of the discount as
Answer:
not taxed
Explanation:
original issue discount which are new issue municipal bonds do not have their interest income taxed at the federal level by the IRS. An investor that purchases the municipal bond from the secondary market however would be accreted and have his income from the bond treated as ordinary income and would be taxed. But interest from original issue discount bonds are not taxed and are also not taxed when held to maturity
Vervet County levies a real property tax based on the following schedule.
Rate Assessed value
3% $-0- to $250,000
+ 1% $250,001 and above
Bilex Inc. owns real property valued at $629,800. Compute Bilex's tax on this property.
A) $13,798
B) $7,500
C) $6,298
D) None of the choices are correct.
Answer:
D. None of the above
Explanation:
Computation for the tax on this property
Property Tax = [(3% × $250,000] + [1% ×($629,800-$250,000)]
Property Tax= $7,500+ $3,798
Property Tax= $11,298
Therefore the tax on this property will be $11,298 which means that the choices listed above are not correct.
Services constitute the bulk of most countries' production and marketing efforts.A. TrueB. False
Answer:
B. False
Explanation:
Physical goods, not services, constitute the bulk of most countries' production and marketing efforts. Even though services represent a higher percentage of GDP than manufacturing, many of these services are directly related to manufacturing goods. E.g. grocery stores are considered services, but they sell physical products. Amazon is the largest retailer in the world and its considered a service, but most of its operations involve physical products. Without physical products, many services would not exist since they complement each other.
The team wanted to prevent customers from mistakenly choosing the hottest hot sauce and risking injury.Which of the following would be a way to Mistake-Proof the process and still maintain a fun atmosphere? a) Have cashiers inspect each purchase and ask patrons if they know which hot sauce they’ve chosen b) Remove the hottest hot sauce from the table of condiments c) Put mild hot sauce in the hottest hot sauce bottle d) Put the hottest hot sauce in a container with a fire-breathing dragon on the lid
Answer:
d) Put the hottest hot sauce in a container with a fire-breathing dragon on the lid
Explanation:
This is a good Mistake-Proof process for the hottest sauce because, the fire-breathing dragon helps to crate the image of the content of the container being very hot. At the same time, the children will like the dragon drawing thereby creating a fun atmosphere for them while eating.
According to the law of supply, assuming other factors are held constant
a. as the price of bread increases, the quantity of bread supplied will decrease
b. as the supply for bread increases, the price of bread will also increase.
c. as the price of bread increases, the quantity of bread supplied will increase.
Answer:
c. as the price of bread increases, the quantity of bread supplied will increase.
Explanation:
According to the law of supply we find out that there is a direct relationship existing between price of a good and quantity no supplied of same good. The law states that holding all factors fixed an increase in price brings about a resultant increase in quantity supplied. With this in mind, as the price of bread soars or goes up, the quantity of bread supplied would also increase too.
Uncollectible accounts; allowance method estimating bad debts as percentage of net sales vs. direct write-off method [LO7-5, 7-6) Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2021, net credit sales totaled $6,500,000, and the estimated bad debt percentage is 1.50%. No previously written-off accounts receivable were reinstated during 2021. The allowance for uncollectible accounts had a credit balance of $62,000 at the beginning of 2021 and $50,000, after adjusting entries, at the end of 2021. Required: 1. What is bad debt expense for 2021 as a percent of net credit sales? 2. Assume Ervin makes no other adjustment of bad debt expense during 2021. Determine the amount of accounts receivable written off during 2021. 3. If the company uses the direct write-off method, what would bad debt expense be for 2021? 1. Bad debt expense $97,5002. Accounts receivable written off $15,0003. Bad debt expense $98,430
Answer:
1. Bad debt expense = $97,500
2. Accounts receivable written off = $109,500
3. Bad debt expense for 2021 = $109,500
Explanation:
Bad debts expense refers to an uncollectible accounts expense that occurs because goods or services are delivered on credit a company to a customer who did not paid the amount owed.
The questions can be answered as follows:
1. What is bad debt expense for 2021 as a percent of net credit sales?
Under this, bad debt can be calculated using the following formula:
Bad expense = Net credit sales * Estimated bad debt percentage ....... (1)
Where;
Net credit sales = $6,500,000
Estimated bad debt percentage = 1.50%
Substituting the values into equation (1), we have:
Bad debt expense = $6,500,000 * 1.50% = $97,500
2. Assume Ervin makes no other adjustment of bad debt expense during 2021. Determine the amount of accounts receivable written off during 2021.
This can be calculated using the following formula:
Accounts receivable written off = Beginning uncollectible balance + Bad debt expenses - Ending uncollectible balance ............ (2)
Where;
Beginning uncollectible balance = $62,000
Bad debt expenses = $97,500
Ending uncollectible balance = $50,000
Substituting the values into equation (2), we have:
Accounts receivable written off during 2021 = $62,000 + $97,500 - $50,000 = $109,500
3. If the company uses the direct write-off method, what would bad debt expense be for 2021?
Under the direct write-off method, the exact amount of uncollectible accounts as they are specifically identified are recorded.
Based on this explanation, bad debt expense for 2021 is equal to the accounts receivable written off during 2021 calculated in part 2 above. Therefore, we have:
Bad debt expense for 2021 = $109,500
The inaccuracy of the grapevine has more to do with the message output than with the input.A. TrueB. false
Answer:
B
Explanation:
Grapevine is a form of informal communication in an organisation. Most of the information spread through the grapevine are gossips which are usually untrue. Thus, the inputs (false stories) are usually false
Currently, the dividend-payout ratio (DIE) for the aggregate market is 60 percent, the required return (k) is 11 percent, and the expected growth rate for dividends (g) is 5 percent.
a. Compute the current earnings multiplier.
b. You expect the DIE payout ratio to decline to 50 percent, but you assume there will be no other changes. What will be the P/E? c. Starting with the initial conditions, you expect the dividend-payout ratio to be constant, the rate of inflation to increase by 3 percent, and the growth rate to increase by 2 percent. Compute the expected P/E.
d. Starting with the initial conditions, you expect the dividend-payout ratio to be constant, the rate of inflation to decline by 3 percent, and the growth rate to decline by 1 percent. Compute the expected PIE.
Answer:
A. 10x
B.8.33x
C.8.57x
D.15x
Explanation:
a. Computation of current earnings multiplier
Using this formula
Current earnings multiplier=Dividend-payout ratio/(Required return-Expected growth rate for dividends)
Where,
Dividend-payout ratio(D/E)= 0.60
Required return (k) = 0.11
Expected growth rate for dividend (g)= 0.05
Let plug in the formula
Current Earning multiplier =0.60/(0.11−0.05)
Current Earning multiplier=0.60/0.06
Current Earning multiplier=10x
Therefore the Current Earning multiplier will be 10x
b. Calculation for the what will be the P/E
Using this formula
P/E=Expected decline D/E payout ratio /(Required return-Expected growth rate for dividends)
Where,
Expected decline D/E payout ratio=0.50
Required return (k) = 0.11
Expected growth rate for dividend (g)= 0.05
Let plug in the formula
P/E=0.50/(0.11-0.05)
P/E=0.50/0.60
P/E=8.33x
Therefore the P/E will be 8.33x
c. Computation for increase in expected P/E
Using this formula
Increase in Expected P/E=Dividend-payout ratio(D/E)/(Increase in rate of inflation - Increase in growth rate )
Let plug in the formula
Where,
Dividend-payout ratio(D/E)=0.60
Increase in rate of inflation =(0.11+0.03=0.14)
Increase in growth rate=(0.05+0.02=0.07)
Let plug in the formula
Increase in Expected P/E=0.60/[(0.11+0.03)-(0.05+0.02)]
Increase in Expected P/E=0.60/(0.14-0.07)
Increase in Expected P/E=0.60/0.07
Increase in Expected P/E=8.57x
Therefore the increase in expected P/E will be 8.57x
d .Computation for decline in the expected P/E
Using this formula
Decline in the expected P/E=Dividend-payout ratio(D/E)/(Decline in rate of inflation - Decline in growth rate )
Let plug in the formula
Where,
Dividend-payout ratio(D/E)=0.60
Decline in rate of inflation =(0.11-0.03=0.08)
Decline in growth rate=(0.05-0.01=0.04)
Let plug in the formula
Decline in the expected P/E=0.60/[(0.11-0.03) -(0.05-0.01)
Decline in the expected P/E=0.60/(0.08-0.04)
Decline in the expected P/E=0.60/0.04
Decline in the expected P/E=15x
Therefore the Decline in the expected P/E will be 15x.