### Suppose ke the required rate of return

Assignment Help Macroeconomics
##### Reference no: EM1333401

Common stock value explained in this solution

Friedman Steel Company will pay a divident of \$1.50 per share in the next 12 months (D1). The required rate of return (Ke) is 10 percent and the constant growth rate is 5 percent.

a. Compute Po
b. Assume Ke, the required rate of return, goes up to 12 percent; what will be the new value of Po?
c. Assume the growth rate (g) goes up to 7 percent; what will be the new value of Po?
d. Assume D1 is \$2.00, what will be the new value of Po?

### Write a Review

#### Function of strategies in cournot duopoly

Assume two firms, A and B, serve a market with demand D(p) = 11 - p.  Also assume that (i) firms compete for market share

#### Explain when an economy ever pursue

Explain when an economy ever pursue a contractionary fiscal policy.

#### Assume as a professional economist debate

Assume as a professional economist debate about the wisdom of pursuing discretionary fiscal policy.

#### Examining energy efficiency and economic efficiency

Engineers at national research laboratory built a prototype automobile which could be driven 180 miles on single gallon of unleaded gasoline. They estimated that in the mass production the care would cost 40k for each unit to build.

#### Estimate before-tax charcoal price

Give the before-tax charcoal price and quantity exchanged. Give the after-tax charcoal price to buyers, the quantity exchanged, and total tax revenues.

#### Equilibrium price and quantity using given data

You are the manager of an organization in America that distributes blood to hospitals in all 50 states and the District of Columbia.

#### How percapita income fiscal policy laws local economies

how percapita income fiscal policy laws local economies and census data affect the ability to fund governmental functions.

#### Effect of tax on fixed-marginal and average costs

Suppose a firm must pay an annual tax, which is a fixed sum, independent of whether it produces any output-How does this tax affect the firm's fixed, marginal, and average costs?

#### Marginal opportunity cost of services in two countries

What is the marginal opportunity cost of services in each country? Who has the comparative advantage in factory-stuff?

#### Impact of open market operations by bank of canada

Suppose Bank of Canada (BOC) purchases \$100 million worth of government bonds from a chartered bank. Assume BOC imposes 5% legal reserve requirement ratio to the banking system.

#### Elucidate why not the change in the price of military goods

Elucidate why not the change in the price of military goods will be reflected in how the United States measures inflation.

#### Price regulation in product markets

This document shows evaluation of alternative approaches to analysing the effectiveness of public policy and Assess the impact of government policies on selected areas.