Generally speaking, a differentiator chooses to divide its market into niches and segments in which customers will pay premium prices.
What is Differentiation Strategy?Your differentiation strategy is the way in which you make your firm stand out from otherwise similar competitors in the marketplace. Usually, it involves highlighting a meaningful difference between you and your competitors. And that difference must be valued by your potential clients. A strong differentiator will provide a competitive advantage for your firm.
This is why many firms choose to compete with a focused strategy. In a focused strategy you narrow your appeal to a niche audience.
For example, an accounting firm that works exclusively with chain restaurants has a very compelling differentiator to that niche market segment. However, a different audience segment, such as automobile dealers, would find no value in working with the restaurant specialists.
Therefore, we can conclude that the correct option is Generally speaking, a differentiator chooses to divide its market into niches and segments in which customers will pay premium prices.
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Excise taxes on tobacco and alcohol and state sales taxes are often criticized for being regressive. Although everyone pays the same rate regardless of income, why might this be so
Excise taxes on tobacco and alcohol and state sales taxes are often criticized for being regressive. Although everyone pays the same rate regardless of income, this might be so because low-income individuals are more prone than high-income individuals to purchase alcohol, tobacco, and gasoline.
What are Excise taxes?Any duty on produced items that are assessed at the time of manufacture rather than the time of sale is known as an excise or excise tax. Excises and customs duties are frequently used interchangeably, although customs taxes are imposed on already-existing products when they cross a defined border in one direction, whereas excise is imposed on goods that were created inland.State sales taxes and excise taxes on alcohol and cigarettes are frequently criticized for being regressive. Despite the fact that everyone pays the same rate regardless of income, this may be the case because people with low incomes are more likely than those with higher incomes to buy alcohol, cigarettes, and fuel.To learn more about Excise taxes refer to:
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The Spanish class system placed people in the top class primarily based upon how much American blood a person had. how much Spanish blood a person had. where a person worked. whom a person marr
The Spanish class system placed people in the top class primarily based upon how much Spanish blood a person had.
What is blood system hierarchy?The system was organized as a racial hierarchy according to the amount of Spanish blood each person had .The less Spanish blood they had, the lower they were placed in the system. The caste system was more than a simple class system, it was a social and racial classification.As if that were inhumane enough, each caste had strict rules that governed their wealth, their careers, their dress, and even the friendships they could have. The caste system is a clear example of systemic racism and exclusion of people of color.The peninsula was Spaniards of pure Spanish descent. They were also the most powerful group in the caste system. After them came the Criollos, born in Nueva Spain to Spanish descent.They were considered second-class and held positions of little power within government, such as local councils. In third place was a Mestizo, a Spaniard and his native American descendant.Then came the mulattoes of African and Spanish descent. Life for the mulatto was much more difficult. Second, pure Native Americans were the last people in the system. At the end of the caste system were the Africans and the slave people. As we know they lived an inferior life.Learn more about Spanish class system https://brainly.com/question/5215808
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Suppose that there are two types of cars: high value (which are worth $10,000 to buyers) and low value (which are worth $5,000 to buyers).
If buyers cannot observe the quality of a car before buying it, they will be willing to pay Less than $10,000 for a car. Thus, the sellers of high-value cars will not be willing to sell their cars. The result of this information asymmetry will be that there are no high-value cars in the market , a problem known as Adverse Selection.
What is Adverse Selection?Adverse selection refers generally to a situation in which sellers have information that buyers do not have, or vice versa, about some aspect of product quality. In other words, it is a case where asymmetric information is exploited. Asymmetric information, also called information failure, happens when one party to a transaction has greater material knowledge than the other party.
Adverse selection happens when there are two or more parties and one of them has more information than the other.
Therefore, we can conclude that the correct option is C.
Your question is incomplete, but most probably your full question was:
Suppose that there are two types of cars: high value (which are worth $10,000 to buyers) and low value (which are worth $5,000 to buyers). If buyers cannot observe the quality of a car before buying it, they will be willing to pay ______ for a car. Thus, the sellers of high-value cars _____ be willing to sell their cars. The result of this information asymmetry will be that there are ____________, a problem known as adverse selection.
A. Less than $10,000 / will / no high-value cars in the market
B. More than $10,000 / will / no high-value cars in the market
C. Less than $10,000 / will not / no high-value cars in the market
D. More than $10,000 / will not / no low-value cars in the market
E. Less than $10,000 / will not / no low-value cars in the market
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If the local government imposed a minimum wage of $4 in productionville, how many people would be unemployed
If the local government imposed a minimum wage of $4 in production Ville, then employment will decrease by 0.
Who among the following would be counted as unemployed?
If a person does not have a job, has actively sought employment during the previous four weeks, and is currently eligible for employment, they are considered to be unemployed.
How do we figure out the unemployment rate?
To find the proportion of unemployed people, divide the number of unemployed people by the total workforce, and multiply the result by 100.
What is considered the natural rate of unemployment?
Many people believe that a rate of unemployment between 4% and 5% indicates full employment and is not very alarming. The lowest rate of unemployment that exists while inflation is steady or when it is not increasing is known as the natural rate of unemployment.
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Individuals are responsible for each outcome in determining supply chain roles and responsibilities. true false
The statement "Individuals are responsible for each outcome in determining supply chain roles and responsibilities." is true. This is further explained below.
What is supply?Generally, In economics, supply is the entire quantity of a certain commodity or service that is accessible to customers.
In conclusion, I agree with the statement, "Individuals have a critical influence in shaping supply chain roles."
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Match each term with its description. Tiles human capital right gross domestic product infrastructure physical capital Pairs the direction a production possibilities curve shifts when the economy grows
All are terms relating to Economic Growth.
Right: the direction a production possibilities curve shifts when the economy grows.Tiles: Physical CapitalHuman capital: the skills and knowledge that employees bring to their jobs.Infrastructure: the items necessary for a business or community to function, such as railroads, airports, hospitals, and Internet.What is Economic growth of a country?When comparing one period of time to another, economic growth is a rise in the production of economic commodities and services. It can be calculated in nominal or real (inflation-adjusted) terms. Although other metrics are also employed, gross national product (GNP) or gross domestic product (GDP) are the most common ways to quantify overall economic growth. An economy is said to be experiencing economic growth when its total output rises. Gains in overall production frequently, but not always, correlate with higher average marginal productivity.In economic growth, there is a gain in income, which encourages people to spend more money on goods and services, raising the standard of living or quality of life in tangible terms.
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Answer:
This is the correct answer.
Explanation:
Joe decided to start washing cars on his street. The other kids in the neighbourhood noticed Joe was making a lot of money washing cars and decided to open their own car wash. When they opened their own car wash, the equilibrium price ________ and the equilibrium quantity ________.
Joe decided to start washing cars on his street. The other kids in the neighborhood noticed Joe was making a lot of money washing cars and decided to open their own car wash. When they opened their own car wash, the equilibrium price decreased and the equilibrium quantity increased.
The price at which the quantity provided and demanded are equal is referred to as the equilibrium price. It is established by where the demand and supply curves cross. If more goods or services are produced than are needed to satisfy demand at the going rate, there is a surplus, which pushes prices lower.
Reduced demand will result in a drop in the equilibrium price and a reduction in supply. With everything else remaining constant, an increase in supply will result in a decrease in the equilibrium price and an increase in the amount required. The equilibrium price will increase as the supply declines, while the quantity needed will go down.
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Data indicated that jeff's fidgeting accounted for _____ of his calorie burn.
a. one-quarter
b. three-quarters
c. one-half
d. virtually all
Data indicated that jeff's fidgeting accounted for c. one-half of his calorie burn.
The more energetic you are, the greater calories you burn. In reality, some individuals who are stated to have a quick metabolism are possibly just greater lively and perhaps fidget more than others. aerobic exercising is the most efficient way to burn calories and includes sports consisting of taking walks, bicycling, and swimming.
Most people will burn over 1800 calories each day, without doing any exercise in any respect. As Dr Potter explains, this is because we burn maximum of our calories just via each day bodily features. “Our bodies have all forms of distinctive house responsibilities capabilities they must preserve even at relaxation.
As a widespread guiding principle, girls usually burn approximately 2,000 calories in step with day and men burn about 2,500 energy consistent with day. those numbers are frequently used to determine an approximate food intake for weight protection. however these numbers are especially variable.
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The value of the marginal product is equal to the marginal revenue product under perfect competition in the product market because:
The value of the marginal product is equal to the marginal revenue product under perfect competition in the product market because: the firm in perfect competition is a price taker.
What is the perfect competition?Perfect competition is the term that is used to refer to the type of competition that exists where there is perfect information in the market. In this market structure the monopoly does not exist.
There is free entry and there are no forms of barriers. Everyone has opportunity and the prices are not in the hands of the people that are selling or those that are buying. Hence we would have marginal product is equal to the marginal revenue product
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_____ refers to the process of combining aspects of reporting, data exploration and ad hoc queries, and sophisticated data modeling and analysis.
Business intelligence refers to the process of combining aspects of reporting, data exploration and ad hoc queries, and sophisticated data modelling and analysis.
What are the five basic tasks of business intelligence?
Business Intelligence. ...
The five key stages of Business Intelligence:Data sourcing : ...Data analysis: ...Situation awareness : ...Risk assessment : ...Decision support. ...Some Definitions:What are the benefits of business intelligence?
Faster analysis, intuitive dashboards.
Increased organizational efficiency.
Data-driven business decisions.
Improved customer experience.
Improved employee satisfaction.
Trusted and governed data.
Increased competitive advantage.
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Business intelligence is the process of combining aspects of reporting, data exploration and ad hoc queries, and sophisticated data modeling and analysis.
What is Business intelligence? It helps organizations to make more data-based or data-driven decisions.Many organizations and businesses have certain goals. They work according to these goals and BI helps these organizations achieve these goals by directing and guiding them. BI uses tools of data analyzing, data visualization, and other data tools to construct graphs and charts. Machine learning, statistics and other methods are used for data mining. It is also used for descriptive analysis and statistical analysis. Using BI produces better forms of processed data. It also results in an increased employee satisfaction.
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Most federal expenditures in texas go to education and health and human services. However, in order to receive these funds, texas must:______.
a) allow the federal government to manage these programs.b) implement progressive taxes in order to generate more revenue.c) coordinate efforts with neighboring states to achieve economies of scale.d) spend state money in these areas first.
For the federal government to fund education and health in Texas, the state government has to d) spend state money in these areas first.
How does Texas access federal funds?Existing federal arrangements with Texas allow it to access federal funding in certain areas such as education, health, and human services.
In order to access these funds however, the Texas government needs to show a commitment to improving these areas by spending on them first.
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Business cycles refer to the:____.
a. continued expansion in real gdp.
b. recurrent swings (up and down) in real gdp.
c. continued decline in real gdp.
d. period when real gdp grows at unusually high rates.
Business cycles refer to the recurrent swings (up and down) in real GDP.
Economic downturns were seen by economists in both the United States and Europe as "diseases" that needed to be addressed; as a result, countries with a history of development and prosperity were considered to be "healthy" economies.
However, by the end of the 19th century, a large number of economists had come to understand that economies were cyclical by their very nature, and research was increasingly focused on identifying the primary factors that shaped the direction and disposition of national, regional, and industry-specific economies.
Economic experts, corporate leaders, and business owners point to a number of elements as being particularly crucial in determining the character of business settings today.
Hence, option C is correct.
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On April 15, Compton Co. paid $2,800 to upgrade a delivery truck and $125 for an oil change. What account(s) would be debited for the upgrade to delivery truck and oil change
The journal entries for the upgrade to Compton Co.'s delivery truck and oil change expenditures are as follows:
Journal Entry on April 15:
Delivery Truck dr......... $2,800
Delivery Truck Maintenance Expense dr......... $125
To Cash $2,925
(To record the upgrade to the delivery truck and maintenance expense.)
Journal entries are used by the companies, firms, NPO, etc. to keep a record of the transactions done by it.
Journal entries are maintained with appropriate proofs of receipt, bill, etc.
This is so that the transaction can be backed by proof of such a transaction happening.
Journal entries are recorded in the journal book maintained by them.
Hence, The journal entries for the upgrade to Compton Co.'s delivery truck and oil change expenditures are as follows:
Journal Entry on April 15:
Delivery Truck dr......... $2,800
Delivery Truck Maintenance Expense dr......... $125
To Cash $2,925
(To record the upgrade to the delivery truck and maintenance expense.)
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In the consumer decision journey, _______ extends customer interactions to new sources of value, such as related products or partnered businesses.
In the consumer decision journey "innovation" extends customer interactions to new sources of value, such as related products or partnered businesses.
What is partnered business?A formal agreement between two or more parties to run a business and split the profits is called a partnership.
Some key features of partnered business are-
Partnership arrangements come in many different forms. One type of business where partners may have minimal liability is a partnership where all participants share profits and liabilities equally.All partners in a general partnership are responsible for management and earnings. They each have the authority to act on behalf of the company because they jointly own the assets. Additionally, each partner is totally liable for all of the firm's financial commitments.Advantages of partnered business are-
Two heads are better than one, and that is one benefit of a partnership.Your company is simple to launch and has modest startup expenses. The business has access to extra funding.To know more about partnership business, here
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As shift supervisor, Cassandra developed the schedule for the day, indicating which of her staff would be doing which job. The staff follows this schedule because of Cassandra's ______ power.
The staff follows this schedule because of Cassandra's legitimate power.
As a result, the organization as a whole and the followers' attitudes change for the better. The four I's, often known as the four distinguishing behaviors of transformational leaders, are typically displayed. Inspirational motivation, idealized influence, intellectual stimulation, and individualized consideration are examples of these activities.Personalized power, or power oriented at assisting oneself, can be used to advance one's own selfish goals rather than those of others or the organization. This type of power can give the word "power" a negative reputation.Which of the following are considered soft influence tactics?Personal appeal, consultation, inspirational appeal, ingratiation, and reasonable persuasion are examples of soft methods. Compared to strong methods, soft techniques provide the person being persuaded greater freedom in determining whether or not to accept the influence.Learn more about legitimate power
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The amount of goods and services people can buy with the money they have is called their:__________.
The amount of goods and services people can buy with the money they have is called the Purchasing power.
The worth of a currency is determined by how many goods or services one unit of that currency can be used to purchase. Inflation may cause it to deteriorate over time. This is due to the fact that you may acquire fewer items or services as a result of increased pricing. A currency's buying power is another name for its purchasing power.
The term "purchasing" or "buying power" in the context of investments refers to the dollar amount of credit that a client has in relation to the marginable securities that are currently in their brokerage account. The Consumer Price Index, which tracks changes in the prices of products and services over a period of months or years, assesses changes in consumer purchasing power.
The Consumer Price Index, which was first published in 1921 and is calculated each month using information gathered by the Bureau of Labor Statistics from the Census Bureau, shows changes in the cost of 400 carefully chosen commodities, ranging from food to housing. The Consumer Price Index, which measures changes in the prices of goods listed on it, offers the most accurate estimation of consumer spending power.
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When a consumer purchases a product, a(n) _________ is created for this item to be re-stocked by the merchant.
When a consumer purchases a product, a demand is created for this item to be re-stocked by the merchant.
Consumer demand is a monetary measure of a group's choice for a service or product primarily based on availability. It represents the shopping behavior of clients and helps determine the shopping traits of unique populations.
The monetary elements that maximum affect the call for customer goods are employment, wages, expenses/inflation, hobby fees, and purchaser self-belief.
Demand is decided by using some factors, inclusive of the range of humans looking for your product, how a great deal they are inclined to pay for it, and what kind of your product is available to consumers, both from your business enterprise and your competition.
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Units Direct materials Percent Complete Conversion Percent Complete Units completed and transferred out 120,000 100% 100% Ending work in process inventory 40,000 20% 60% Determine the equivalent units of production for the Forming department for direct materials and conversion costs assuming the weighted average method.
The equivalent units of production for the Forming department for direct materials and conversion costs assuming the weighted average method is equal to 144000 (conversion) & 128000 direct material.
DESCRIPTION DIRECT MATERIAL CONVERSION
Transfered out unit (100% complete) 120000 120000
ENDING INVENTORY
Material = 40000 * 20% 8000 24000
concersion - 40000 * 60%
EQUIVALENT UNITS 128000 144000
Conversion percentage is the method of the percentage into whole number i.e conversion cost.
Average method referred to as the weighted average fee technique, the common-cost approach is an accounting formula used whilst calculating inventory price. This figure is reached by way of dividing the entire fee of products by means of the total variety of products over a particular accounting cycle.
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Who uses accounting information?
a. institutional investors
b. private investors
c. managers debentures
d. creditors
Creditors use accounting information.
A creditor or lender uses accounting information to determine a borrower's ability to repay a loan, the number of the borrower's assets and liabilities, proof of income, economic status, etc. before the borrower lends money to an economic entity.
Accounting plays an important role in running a business, tracking income and expenses, ensuring regulatory compliance, and providing quantitative financial information that can be used to make business decisions for investors, management, and government. To provide.
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Do nontraditional products positively impact the housing market or will they lead to further downturns in the industry?
Nontraditional products always positively impact the housing market.
First, they are such flexible that they allow the lender to make adjustments on the loans which would ensure that the borrower makes the repayment even after they defer at one point of time.
This means that they are not subjected to any amortization and their value do not deterioate.
Non-traditional goods means goods which do not include crepe rubber, scrap rubber, sheet rubber, latex or fresh coconuts, or agricultural, horticultural or dairy produce. These non traditional goods includes goods other than black tea not in packet or package form and each packet or package must not weigh more than one kilogram and always includes organic tea in bulk.
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(g) The government imposes a per-unit tax on the production of knowledgium. Which of the seven cost curve(s) would be affected
If the government should impose the per unit tax, the parts that would be affected are the average variable cost and the average cost
What is the per Unit tax?This is the tax that is imposed per unit or on each unit of a good that has being sold or a service that has been rendered.
This is the type of tax that would affect the average variable cost and the average cost.
This type of tax is one that is proportional to the unit of the good sold. This is in terms of the quantity sold and not the price that was used to sell the good.
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One important driver for organizational change is ________, meaning that leaders continually urge employees to strive for higher standards or better practices.
An important driver of organizational change is the influential power, which means that leaders continually encourage employees to seek higher standards or best practices.
What is the influential power?It is a characteristic related to organizational leadership, that is, the leader is responsible for driving organizational change through his own example and behaviors, which when positive, will reflect the behavior of employees, helping to motivate, productivity and create a favorable culture to development.
Therefore, it is essential that the leader drives organizational change through compliance with ethics, objective and direct communication and assistance to the needs of employees.
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During 2015 Lopez Corporation reported net sales of $3,200,000 and net income of $1,200,000. Its balance sheet reported average total assets of $1,600,000. Calculate the asset turnover.
The asset turnover is 2.4 times.
Asset turnover = Net sales \div Average total assets
Asset turnover = $3,000,000 \div [ $1,000,000 + $1,500,000 ] \div 2
Asset turnover = 2.4 times
Asset turnover is the ratio of total sales or revenue to average assets. This metric helps investors understand how effectively companies are using their assets to generate revenue. Investors use asset turnover to compare similar companies in the same industry or group.
In the retail sector, an asset turnover of 2.5 or higher may be considered good, but in the utility sector, a company is more likely to aim for an asset turnover between his 0.25 and 0.5.
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Direct Labor Variances Bellingham Company produces a product that requires 4 standard direct labor hours per unit at a standard hourly rate of $20 per hour. If 15,000 units used 61,800 hours at an hourly rate of $19.85 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance
The Correct Figures are as Follows :-
(A) The direct labor rate variance is - 9270 ( Favorable ).
(B) The direct labor time variance is 36,000 ( Unfavorable ).
(C) The direct labor cost variance is 26,730 ( unfavorable ).
To calculate the direct labor rate variance, we need to use the following formula:Direct labor rate variance = (Standard Rate - Actual Rate) ×Actual Quantity
Now we know,
SR = Standard Rate
AR = Actual Rate
Therefore,
a) Direct labor rate variance= $133,085
Labor Rate variance = (SR-AR) × AH
= (20-19.85) × 61,800
= - 9270 Favorable
b) Labor time variance = (SH-AH) × SR
= (15000 × 4 - 61800) × 20
= 36,000 Unfavorable
c) Labor cost variance
= 9270F + 36000 U
= 26,730 Unfavorable
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Brenda says her assets are definitely greater than her liabilities. Which explains whether Brenda is correct
Brenda says her assets are definitely greater than her liabilities .Brenda is mistaken since it is possible that the entire worth of all of her assets is lower than the value of all of her obligations. This is further explained below.
What is assets?Generally, assets are economic resources owned or controlled by individuals, corporations, or countries with the idea that they will provide a future financial advantage.
In conclusion, Brenda asserts that her assets are far more than her obligations at this time. Brenda is erroneous because it is conceivable that the whole value of all of Brenda's commitments is more than the total value of all of Brenda's assets combined.
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If you, as an individual, conclude that doubling your pay check is a good thing for you, then it must be a good thing for the entire society.\
The statement is false. The doubling of a paycheque is not a good thing for the entire society.
Your pay cheque is a piece of paper that your organization gives you as your wages or revenue, and which you may then cash at a bank. you may also use a pay cheque as a manner of regarding your wages or salary. they have got labored for about weeks without a paycheck. COBUILD Advanced English Dictionary.
The first data of the time period paycheque come from the early 1900s. It combines the phrases pay, which can mean “the money a worker gets in change for paintings,” and test, a report that directs a bank to present someone the quantity of cash detailed.
A paycheque, also spelled pay check or pay cheque, is historically a paper file issued via an organization to pay an employee for offerings rendered.
Your question is incomplete. Please find the complete question below.
If you, as an individual, conclude that paying no taxes is a good thing for you, then it must be a good thing for the entire society.
- True
- False
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Market Data Corporation is required to file a registration statement with the Securities and Exchange Commission. This statement must contain:
Based on the fact that Market Data Corporation needs to file a registration form with the Securities and Exchange Commission, their statement should include b. a description of securities being offered for sale.
What is needed to sign a registration statement with the SEC?The Securities and Exchange Commission was established to ensure that the stock and capital markets run as smoothly as possible.
For this to happen, new companies that want to issue stock need to file a registration form with the SEC and this form must talk about the securities that are up for sale so that the SEC can have them on record.
Options for this question include:
a. a copy of prospectuses to be provided to investors. b. a description of securities being offered for sale. c. a record of pre-registration sales in securities. d. a statement that securities being offered for sale are worth the priceFind out more on the Securities and Exchange Commission at https://brainly.com/question/9089676
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When the dollar strengthens the reported consolidated earnings of us based mncs are affected by translation exposure when:_____.
When the dollar strengthens the reported consolidated earnings of us based MNCs are affected by translation exposure when unfavorably, or favorably affected.
Borrow in foreign currency and convert to local currency before revaluation. Economic risk is a type of foreign exchange risk caused by the impact of unexpected currency fluctuations on a company's future cash flows, foreign investments, and earnings.
Since when the dollar is powerful the current of foreign purchased few of U. S dollar and in the case when the dollar is weak the condition is opposite
Therefore at the time of a powerful dollar, the consolidated earning MNC is unfavorably affected and at the time of weakens, it is favorably affected
As the dollar rises (the exchange rate rises), the relative prices of domestic goods and services rise and the relative prices of foreign goods and services fall. 1. Changes in relative prices cause US exports to fall and US imports to rise.
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An investor can invest money with a particular bank and earn a stated interest rate of 13.20%; however, interest will be compounded quarterly. What are the nominal, periodic, and effective interest rates for this investment opportunity
The effective compound interest rate is 13.87%.
What is Compound Interest?The interest on a loan or deposit that is calculated based on both the initial principle and the accumulated interest from prior periods is known as compound interest (also known as compounding interest). Compound interest, sometimes known as "interest on interest," is said to have its roots in 17th-century Italy. Compared to simple interest, which is calculated solely on the principal amount, it will cause a sum to grow more quickly. The frequency of compounding determines the rate at which compound interest accumulates. The compound interest increases with the number of compounding periods. For instance, during the same period of time, the amount of compound interest accrued on $100 compounded at 10% yearly will be less than $100 compounded at 5% semi-annually.Nominal = interest rate
That is Nominal rate is also known as interest rate.
Nominal rate = 13.20%
The invested money is compounded quarterly.
Periodic = 13.2%/4 (quarterly)
Periodic rate = 3.30%
Now,
The interest rate that accounts for compounding over a specific time period is called the Effective Annual Interest Rate (EAR). The rate of interest that an investor can earn (or pay) in a year after taking into account compounding is known as the effective annual interest rate, to put it simply.
Effective annual rate = EFF% = [1 + (0.13200 / 4)]⁴ - 1 = 13.87%
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Oberholser, Inc., has an issue of preferred stock outstanding that pays a dividend of $3.15 every year in perpetuity. If this issue currently sells for $92 per share, what is the required return
The required rate of return is $3.42%
What is Perpetuity?A constant cash flow with indefinite period of time is called perpetuity. In this question a perpetual payment of dividend is being made. so the price of the share is calculated by the formula of perpetuity.
Given:
Present value of perpetuity = $92 per share
Cash flows = $3.15 every year
Find:
Rate of return can be calculated from the perpetuity formula
Present value of perpetuity = Cash flows / Required rate of return
Present value of perpetuity = Cash flows / Required rate of return
$92 = $3.15 / Required rate of return
Required rate of return = $3.15 / $92
= 0.0342
= $ 3.42%
Therefore the Required return for Oberholser, Inc will be 3.42%.
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