(a) FinTech in INTERNATIONAL ISLAMIC FINANCIAL INSTITUTIONS PERSPECTIVE:
Adoption of FinTech in international Islamic financial institutions has been growing rapidly, providing innovative solutions and improving efficiency in various areas.Islamic banks and financial institutions are leveraging FinTech to enhance customer experience, offer Sharia-compliant digital products and services, and streamline operations.Examples of FinTech in international Islamic financial institutions include:
Islamic Crowdfunding platforms that facilitate investment in Sharia-compliant projects and businesses.Digital wallets and mobile payment solutions that enable convenient and secure transactions adhering to Islamic principles.Robo-advisory platforms that provide automated investment advice based on Islamic finance principles.Blockchain technology for transparent and secure record-keeping in Islamic banking transactions.RegTech solutions to ensure compliance with Islamic finance regulations and standards.(b) FinTech in Islamic FINANCIAL INSTITUTIONS BANGLADESH PERSPECTIVE:
FinTech is gaining traction in Islamic financial institutions in Bangladesh, catering to the growing demand for digital Islamic financial services in the country.Islamic banks in Bangladesh are adopting FinTech solutions to offer convenient and accessible Sharia-compliant financial products and services to a wider customer base.Examples of FinTech in Islamic financial institutions in Bangladesh include:
Mobile banking applications that provide Islamic banking services such as account management, fund transfers, and bill payments.Online investment platforms offering Islamic investment options, allowing individuals to invest in Sharia-compliant investment instruments.Digital payment solutions that adhere to Islamic finance principles, enabling cashless transactions based on the concept of Murabaha.Peer-to-peer financing platforms facilitating Islamic crowdfunding for small businesses and entrepreneurs.Digital Islamic microfinance platforms supporting financial inclusion by providing microloans and financial services to underserved communities.Note: Please keep in mind that the examples provided are general and may vary depending on the specific institutions and developments in the FinTech landscape.
About InnovativeInnovation can be interpreted as a process and/or result of developing the use/mobilization of knowledge, skills and experience to create or improve new products, processes and/or systems, which provide significant or significant value.
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True or false. Faced with seasonal peaks, an effective revenue management tactic is to charge a higher price during the peak period and a higher price during off-peak periods.
False. Faced with seasonal peaks, an effective revenue management tactic is to charge a higher price during the peak period and a lower price during off-peak periods, rather than charging a higher price during both periods.
This strategy is known as price discrimination or yield management. The goal of revenue management is to optimize revenue by adjusting prices based on demand fluctuations. During peak periods, when demand is high, businesses can capitalize on the increased willingness to pay by setting higher prices. This allows them to capture a larger share of the consumer surplus. On the other hand, during off-peak periods when demand is lower, setting lower prices can help attract more customers and maximize revenue that would otherwise be lost due to empty capacity.
By implementing dynamic pricing strategies, businesses can effectively manage their inventory and allocate resources to maximize revenue. It is important to note that this approach requires careful analysis of customer behavior, market conditions, and pricing elasticity to strike the right balance between maximizing revenue and maintaining customer satisfaction.
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pls be nice and answer this for me. in the middle of a test. 50 pts!
Nate received an unusually large requisition order from another department for a new type of material that they had not purchased before. He had a good relationship with the supplier so he sent the supplier an invoice for the order. What should Nate have done differently?
A. Solicited for a bid from the supplier
B. Solicited for a purchase order with the supplier
C. Ask the supplier for Verification for the requisition order
D. Used a new supplier since it was a new type of goods
Answer:
Solicited for a bid from the supplier.
Explanation:
Solicited for a bid from the supplier should Nate have done differently. Thus, option (a) is correct.
What is supplier?
The term supplier refers to supplies of the raw material and the goods. The supplier was the always part of the company to provide the customer the goods and the services. Suppliers provided the transportation of those materials. Suppliers are the mediator of the supply chain.
A bid is solicited, it signifies the target is actively looking for a buyer and wants to be bought as the supplier. These offers—also known as those that have the support of the management of both companies are frequently referred to as “friendly takeovers.” Solicitation bids, submission bids, and selection bids are the three different categories of bids.
As a result, the solicited for a bid from the supplier have the differently done. Therefore, option (a) is correct.
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Which type of inflation occurs when prices are high, then drop due to lower demand, and then are restored to a previous high level? a) hyperinflation b) disinflation c) inflation d) reflation
Answer:
Reflation
Explanation:
The type of inflation which occurs when prices are high, then drop due to lower demand, and then are restored to a previous high level is known to be as reflation Option(d) is correct generally and actually.
What does Reflation means?Reflation is utilized to portray an arrival of costs to a past pace of expansion.
One use portrays a demonstration of invigorating the economy by expanding the cash supply or by diminishing expenses, looking to bring the economy explicitly the cost level back up to the drawn out pattern.
In this point of view, reflation, is diverged from expansion (barely talking) over the some drawn out pattern line, while reflation is a recuperation of the cost level when it has fallen beneath the pattern line.
For instance, on the off chance that expansion had been running at a 3% rate, yet for one year it tumbles to 0%, the next year would require 6% expansion (really 6.09% because of building) to get back up to the drawn out pattern. This higher than typical expansion is viewed as reflation, since it is a re-visitation of pattern, not surpassing the drawn out pattern.
This qualification is predicated on a hypothesis that financial development, where there is long haul development in the economy and cost level, is both feasible and alluring. Similarly as disinflation is viewed as an adequate remedy to high expansion, reflation is viewed as a cure to flattening.
Therefore Option(d) is correct.
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Please help I'm about to fail my class and i will be grounded for life, 100 pts for it! its financial literacy
Part One–Research
Imagine you bought 100 shares of stock three years ago and are selling it today. Select a company and research its stock prices. You can start with websites like Nasdaq and Fidelity. Determine the stock's price three years ago, or the purchase price, and its price today, or the selling price.
Part Two–Determine the Real Return
Calculate the real return of your stock investment using the following information:
Purchase price of 100 shares of stock
Selling price of 100 shares of stock
10% tax rate
3% inflation rate
2% administrative fee on the selling price of the stock
Part Three–Evaluate
Analyze your research and calculations, and answer the following questions:
What company did you select to buy stock in? Why did you select the company?
Consider the real return of the stock investment. Do you consider it a wise investment? Why or why not?
1. I imagine buying 100 shares of Amazon.com Inc. on January 3, 2020, when the stock price was $93.75, investing $9,375.
Today, October 31, 2022, the stock price of Amazon.com Inc. is $102.44.
2. The real return on my investment in Amazon.com Inc was a net loss of 7.12% or $667.60.
3. The company I selected to buy its stock three years ago was Amazon.com Inc.
4. I decided on Amazon.com Inc., hoping to earn spectacular returns since it is a multinational technology company.
5. When I consider the actual return on the stock investment in Amazon.com Inc., I think it was an unwise investment.
6. The investment returned a negative real value because I realized less than I initially invested; I actually lost about $667.60 overall.
What is the stock investment?Stock investment is the purchase of shares for an ownership interest in a publicly-listed company.
The investor makes the investment with the hope that the investee will grow and perform well over some period, enabling the investor to earn some real returns (in the form of dividends and capital appreciation).
Purchase of 100 shares Jan. 3, 2020 = $9,375 (100 x $93.75)
Sales of 100 shares Oct. 31, 2022 = $10,244 (100 x $102.44)
Tax (10%) = $1,024.40 ($10,244 x 10%)
Inflation (3%) = $307.32 ($10,244 x 3%)
Administration fee on sales (2%) = $204.88 ($10,244 x 2%)
Real Returns in dollars = $8,707.40 ($10,244 - $1,024.40 - $307.32 - $204.88)
Loss on returns = $667.60 ($8,707.40 - $9,375)
Loss percentage = 7.12% ($667.60/$9,375 x 100)
Unfortunately, Amazon.com Inc. did not pay any dividends during the period of my investment, and I really lost funds to taxes, inflation, and administration fees when I sold it.
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The picture is above, I’ll mark as brainliest
Answer:
c
i could not see the ful image until now srry
pls give brainliest i need for new rank
Explanation:
Top management notices a variation from budget and an investigation of the difference reveals that the department manager could not be expected to have controlled the variation. Which of the following statements is applicable? Department managers should be credited for favorable variances even if they are beyond their control. Department managers should only be held accountable for controllable variances for their departments. Department managers' performances should not be evaluated based on actual results to budgeted results. Department managers should be held accountable for all variances from budgets for their departments.
Department managers should only be held accountable for controllable variances for their departments.
When there is a variation from budget, it is important to investigate the cause of the difference. In this scenario, it has been determined that the department manager could not have controlled the variance. Therefore, it would not be fair to hold them accountable for something that was beyond their control. However, it is still important to hold them accountable for controllable variances that they could have prevented or managed.
In order to evaluate department manager performance accurately, it is necessary to distinguish between controllable and uncontrollable variances. Department managers should be credited for favorable variances that are beyond their control, but they should be held accountable for all controllable variances for their departments.
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Which statement includes one real benefit from shopping with a credit card? *
1 point
You may earn cash back, travel rewards, or other perks for each dollar you spend
Most stores will give you a discount if you pay with credit instead of cash or debit
It pulls money directly from your bank account, preventing you from overspending
If you do not have the money to pay your monthly bill, you can just wait a few months and pay the same amount then
The statement which includes one real benefit from shopping with a credit card is:
A. You may earn cash back, travel rewards, or other perks for each dollar you spendA credit card is a payment card that is authorised by a financial institution which allows the owner of the card to make purchases based on his available card debit limit
There are various benefits to using a credit card which include:
A user can earn rewards or cash back when he spends with his credit cardA thief would not be able to successfully use a stolen credit cardIt is easier to make disputes on a transaction, etcTherefore, the correct answer is option A
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Describe how the Management, Entrepreneurship, & Technology Program in Engineering and Business at UC Berkeley will help you to achieve your goals. Share with us the world you come from (for example, your family, school, community, city, or town). What unique experiences from your world motivated you to apply to our program?
M.E.T. is a program designed for students who desire to work at the crossroads of engineering and business. It is a chance to get two Bachelors of Science degrees.
What is M.E.T.?M.E.T. is for those who want to tackle huge issues and have a solid foundation in math, physics, and the liberal arts. M.E.T. tests your intellectual curiosity as well as your can-do attitude. It is probably previously participated in honors college and advanced placement courses.
It makes the student understand what it takes to fight hard and succeed. M.E.T. takes it a step further by allowing you to put your skills to the test in real-world scenarios.
M.E.T. is a collection of incredibly hardworking and ambitious individuals that have joined forces with an outstanding business network. An individual wants to make something or join a business, and one of the things that drew me to the program was the opportunity to meet and learn from all of these outstanding entrepreneurs who have done precisely what an individual wants to accomplish.
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do you have resources that will help you meet your needs
Answer:
yes
Explanation:
yes
Friday night is a good time to bring in the comments about me being tested for you and your team to make me want you and your team
which of the following policies are consistent with the goal of increasing productivity and growth in developing countries? check all that apply. increasing taxes on income from savings providing tax breaks and patents for firms that pu
The policies consistent with the goal of increasing productivity and growth in developing countries are:
- providing tax breaks and patents for firms that innovate
Providing tax breaks and patents for firms that innovate encourages investment in research and development, which can lead to technological advancements and increased productivity. This policy promotes innovation-driven growth and incentivizes firms to invest in improving their processes, products, and services.
On the other hand, increasing taxes on income from savings can have a negative impact on productivity and growth. Higher taxes on savings reduce the incentive for individuals and businesses to save and invest, which can limit capital accumulation and hinder economic growth.
Therefore, out of the two options provided, only providing tax breaks and patents for firms that innovate is consistent with the goal of increasing productivity and growth in developing countries.
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Q 2:What are some issues in relevance to visiting a client's residence?
These issues may vary depending on the specific context and purpose of the visit. It's important to approach each client visit with professionalism, empathy, and respect.
When visiting a client's residence, there are several issues that can arise. Here are some common ones:
Privacy: Respecting the client's privacy is crucial. It's important to obtain their consent before entering their residence and ensure that any information or observations made during the visit remain confidential.
Security and safety: Both your safety and the client's safety should be considered. If you have any concerns about visiting a client's residence, such as a dangerous neighborhood or potential risks, it's important to address them beforehand.
Professional boundaries: Maintaining appropriate professional boundaries is essential during a client visit. It's important to avoid personal conversations or activities that may compromise the professional relationship or lead to ethical dilemmas.
Cultural considerations: Clients may come from diverse cultural backgrounds, and it's important to be respectful and sensitive to their cultural practices and beliefs. Understand their cultural norms regarding guest etiquette, removing shoes, or other customs that may apply.
Accessibility: Consider the accessibility of the client's residence. If they have mobility limitations or special requirements, ensure that the location is accessible to them. Make appropriate arrangements or accommodations if necessary.
Time and scheduling: Visiting a client's residence requires proper time management and scheduling. Ensure that the visit is scheduled at a convenient time for both parties, and allocate enough time for a thorough discussion or assessment.
Transportation and logistics: Consider the logistics of reaching the client's residence, such as transportation options, parking availability, and travel time. Plan ahead to avoid any delays or inconveniences.
Professional appearance and behavior: Maintaining a professional appearance and behavior during the visit is crucial. Dress appropriately, arrive on time, and conduct yourself in a manner that reflects professionalism and respect.
Boundaries and personal space: Respect the client's personal space during the visit. Be mindful of their comfort level and avoid invading their privacy unless necessary for the purpose of the visit.
Documentation and consent: If there is a need to document any information during the visit, ensure that you have the client's informed consent. Explain the purpose and scope of the documentation and obtain their agreement before proceeding.
Remember, these issues may vary depending on the specific context and purpose of the visit. It's important to approach each client visit with professionalism, empathy, and respect.
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exeter has a material standard of 1 pound per unit of output. each pound has a standard price of $26 per pound. during july, exeter paid $142,000 for 5,030 pounds, which they used to produce 4,790 units. what is the direct materials price variance? (do not round your intermediate calculations.)
Note that in the above scenario, the direct materials price variance is: $10,547.90.
What is Direct Material Price Variance?The direct materials price variance is defined as the difference between the actual price paid for materials and the standard price for those materials.
To calculate the direct materials price variance, you first need to determine the standard cost of the materials used during the period in question.
The standard cost of materials = Standard quantity of materials x Standard price per unit
= 1 pound per unit x $26 per pound
= $26 per unit
Next, we compute the actual cost of the materials used during July. This is given as:
Actual cost of materials = Total amount paid for materials / Total quantity of materials used
= $142,000 / 5,030 pounds
= $28.09 per pound
Finally, you can calculate the direct materials price variance by subtracting the standard cost of the materials from the actual cost of the materials:
Direct materials price variance = Actual cost of materials - Standard cost of materials
That is
= $28.09 per pound - $26 per pound
= $2.09 per pound
Hence, the Direct materials price variance is:
2.09 x 5030
= $10,547.90.
Thus, it is correct to state that the direct materials price variance is: $10,547.90.
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A company BB Ltd makes a product, selling for 20 pence - a can of baked beans. A major supermarket who currently buys their baked beans from a rival baked bean company asks BB Ltd if they will provide them with ‘Own Label’ baked beans for 16 pence a can, the costs of manufacture are as follows:
BB Baked Beans: Costs per can
Direct Materials 4p
Direct Labour 4p
Variable Overheads 3p
FO 4p
Manufacturing Absorption Cost 15p
Advertising 1p
Transport costs (variable) 1p
Total Cost 17p
Should they supply the Supermarket at this price (16p)?
What reservations would you have?
The total cost of the product is estimated to be 17p. Meanwhile, the idea of supplying it at 16p is not a sensible choice to make in order to be profitable. The product should be supplied at a price so that the business can cover its costs and earn profits from it.
The product must be supplied at a price that is higher than its cost.
They should keep a profit margin of at least 1 penny or higher.
When making decisions, managers often must decide between doing what is beneficial for the firm in the short term, and what is beneficial for both the firm and society in the long term. To address this conflict, a firm must
When making decisions, managers are often faced with a conflict between what is beneficial for the firm in the short-term and what is beneficial for both the firm and society in the long-term.
This conflict arises because the actions that benefit the firm in the short-term may not necessarily align with the interests of society as a whole, which can lead to negative consequences for both the company and society in the long-term.
To address this conflict, a firm must adopt a long-term orientation and consider the broader social and environmental impacts of its decisions. This means looking beyond immediate financial gains and recognizing that actions taken today can have far-reaching implications for the company's reputation, customer loyalty, employee morale, and overall sustainability.
Firms that prioritize social responsibility and sustainable business practices are more likely to build strong relationships with stakeholders, including customers, employees, investors, and regulators. They are also better equipped to weather economic downturns and other disruptions, as they have diversified their risk and invested in building resilient supply chains and communities.
Ultimately, the key to addressing the conflict between short-term gains and long-term benefits is a commitment to corporate social responsibility (CSR) and sustainable business practices. By prioritizing the needs of society and the environment alongside those of shareholders, firms can create value for all stakeholders over the long-term, ensuring their continued success and impact.
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*entrepreneurship*
why it is important to adapt to the sudden changes in
your environment?
Because if your mining company gets flooded and you can't mine for a few years you have to be able to find new mines or sell you equipment, or even the mine it's self.
-A mine not producing, is a mine that's losing.
You can apply this to almost anything, but it's most prominent in evolution and Business. in Evolution you die, and in business, if you company is losing money it will die so you have to adapt to sudden changes to avoid imminent death.
Hope this helps.
-Trey Tucker
y
What are the two costs used to compare credit offers?
I
Question 2 (5 points)
What is the difference between simple and compound interest?
Answer:
#2Simple interest is interest paid only on the original investment whereas compound interest paid both on the original investment and on all interest that has been added to the original investment. Since compound interest is calculated based on a larger amount than simple interest, it results in a larger amount of money over time.
Mention five legal ways to spend money
Some ways that you can spend money legally are:
Buying booksGoing on a vacationBuying a companyGiving to the poor or a charityEmploying laborWhat is Money?This refers to the legal tender that is used for the buying and selling of goods and services that have an inherent value
Hence, we can see that based on the given question, money can be spent in a variety of ways legally and this includes starting a business, giving to the poor, etc.
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is illuminati confirmed
Answer:
no because there is no prove confirm its place in our world.
Explanation:
i like cheese
what is decision necessary? what is the process of decision making?
Answer:
Decision making is the process of making choices by identifying a decision, gathering information, and assessing alternative resolutions. Using a step-by-step decision-making process can help you make more deliberate, thoughtful decisions by organizing relevant information and defining alternatives.
What is true about the risk and return of an investment ?.
Risk and return have a positive relationship: the greater the risk, the greater the potential for profit or loss. Low levels of uncertainty (risk) are associated with low returns, while high levels of uncertainty (risk) are associated with high returns.
Higher risk enterprises often provide higher profits than lower risk ventures. This is because investors expect a bigger return for taking on more risk when investing.
A US T-Note, for example, is less risky than a corporate bond and will provide a return/yield of 2%. However, the corporate bond will be more hazardous, therefore to entice investors, a 6% yield will be offered to compensate them for assuming the increased risk.
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Which letter represents consumer surplus with trade, but before the tariff
The quote that best supports answer to Part A is a coupon is voucher or document that entitles holder to a discount, rebate, or other special offer on particular product or service.
What is a rebate?A rebate is a partial refund or discount offered by a seller or manufacturer to incentivize a purchase or compensate for an overpayment. It is usually offered in the form of cash, a gift card, or a voucher that can be redeemed against future purchases. Rebates are often used to boost sales, particularly for high-priced items or during slow sales periods. The rebate amount may be a fixed amount or a percentage of the purchase price. To receive a rebate, a customer typically needs to provide proof of purchase, such as a receipt or invoice, and follow specific instructions on how to claim the rebate. Rebates can be a great way for consumers to save money, but it's important to read the terms and conditions carefully to avoid any hidden fees or restrictions.
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What are the 7 bird species?
There are seven different types of birds: pigeons, ducks, chickens, geese, vultures, hawks, and owls.
What is a bird?Among the flying creatures, birds come in a wide variety of forms and dimensions. They may be found in many different locations around the world and have wings, feathers, and beaks. The peculiar behavior, physical traits, and vocalizations of birds have been the subject of extensive study for many years. They are common in both urban and rural areas and have adapted to a variety of habitats. Birds are diverse, and as a result, many different species have been discovered and cataloged. Insects, seeds, fruit, and even other birds may be consumed depending on the species. The ecology benefits greatly from the services that birds provide, including as pollination, insect eradication, and seed dissemination.To learn more about bird kindly visit to
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many companies view the marketing environment as a(n) __________ element to which they must react and adapt.
Many companies view the marketing environment as an Uncontrollable element to which they must react and adapt.
Market is a place where the consumers and sellers meet in order to purchase and sell goods respectively. Market runs on many factors which include the availability of the goods, the demand for the goods and easy flow of cash. According to some companies and experts marketing environment is uncontrollable as it comes with risks too. Also, the demand for a particular good cannot be controlled by the market as it solely depends on the consumers. For example, if there is a demand of milk chocolate in the market but market has surplus of dark chocolate then the demand for milk chocolate is uncontrollable. The risk factors include economic factors as well as the political factors.
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The activities of the federal reserve board have the most direct influence on.
Answer:
The activities of the Federal Reserve Board have the most direct influence on: bank interest rates, monetary policy (interest rates, credit, etc.)
Select all that apply.
Common skills assessments administered during the employment interview process include:
none of the above
science
keyboarding
math
Answer:
Keyboarding and Math :)
Explanation:
Assume you invested $5,000 in a mutual fund that earns 6% compounded annually on December 1, 2018. The balance in your account on December 1, 2023 will be $
The balance in your account on December 1, 2023 of the mutual fund account will be $6691.
How to calculate the mutual fund?From the information given, the person invested $5,000 in a mutual fund that earns 6% compounded annually on December 1, 2018.
The amount in the account by the date will be:
= 5000 × ( 1 + 6%)^5
= 6691
In conclusion, the correct option is $6691.
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Float is defined as the:Multiple Choiceamount of cash a company can immediately withdraw from its bank account.difference between book cash and bank cash.change in the cash balance from one accounting period to the next.
A country wants to create a fair economy for its people. The government takes control over the country's biggest companies and puts groups of workers in charge. All citizens are encouraged to share the wealth produced in these companies equally, This situation best reflects the influence of which economic thinker? O A. Adam Smith O B. Karl Marx O C. John Maynard Keynes O D. Thomas Robert Malthus
Answer:
B). Karl Marx
Explanation:
Karl Marx is the economic thinker whose influence has been best reflected in the given situation as it talks about socialism which is the intermediate phase between capitalism and attaining full communism as per Marx. Socialism advocates collective pr governmental ownership and administration of the means of production and distribution of goods as mentioned in this situation. It is the foundation to communist society (Marx's proposed version of an ideal economy) where the people hold the ownership of distribution of resources collectively. Thus, option B is the correct answer.
Twyla is a benefits specialist at McCallister Manufacturing. She negotiates contracts for insurance, retirement plans, and other employee benefits in order to get the best possible deal while meeting all legal requirements. She understands the details of each benefit and is able to help employees understand the value of their benefits. This scenario illustrates Twyla's competency in the area of
Twyla is a competent benefits specialist at McCallister Manufacturing, skilled in negotiating contracts for employee benefits while meeting legal requirements. She also excels in helping employees understand the value of their benefits through effective communication.
This scenario illustrates Twyla's competency in the area of employee benefits management and negotiation.
As a benefits specialist at McCallister Manufacturing, Twyla's primary responsibility is to negotiate contracts for insurance, retirement plans, and other employee benefits on behalf of the company.
Her role requires her to have a comprehensive understanding of the details of each benefit offering, including their terms, coverage, costs, and legal requirements.
Twyla's competency lies in her ability to navigate complex benefit plans and effectively negotiate with insurance providers and other benefit vendors.
She is skilled in assessing the needs of the company and its employees to ensure that the benefits package meets the requirements and expectations of both parties.
By leveraging her knowledge and expertise, she is able to secure the best possible deals that align with the company's budgetary constraints while providing valuable benefits to the employees.
Furthermore, Twyla's competency extends beyond negotiation and contract management. She is also proficient in effectively communicating the value of the benefits to the employees.
This includes educating them about the features and advantages of each benefit option, helping them understand how the benefits meet their individual needs, and addressing any questions or concerns they may have.
In summary, Twyla's competency in managing employee benefits encompasses contract negotiation, legal compliance, comprehensive understanding of benefit details, and the ability to communicate the value of the benefits to employees.
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The head of the accounting department at a major software manufacturer has asked you to put together a pro forma statement of the company's value under several possible growth scenarios and the assumption that the company’s many divisions will remain a single entity forever. The manager is concerned that, despite the fact that the firm's competitors are comparatively small, collectively their annual revenue growth has exceeded 50 percent over each of the last five years. She has requested that the value projections be based on the firm’s current profits of $2. 9 billion (which have yet to be paid out to stockholders) and the average interest rate over the past 20 years (9 percent) in each of the following profit growth scenarios:
To put together a pro forma statement of the company's value under several possible growth scenarios, we need to use the following formula:
Value of company = Future profits / (Interest rate - Growth rate)
We can calculate the value of the company under different growth scenarios using this formula. Here are the calculations:
1. Expected annual profit growth rate = 5%
Future profits after 10 years = $2.9 billion x (1 + 5%) ^10 = $5.6 billion
Value of company = $5.6 billion / (9% - 5%) = $140 billion.
2. Expected annual profit growth rate = 10%
Future profits after 10 years = $2.9 billion x (1 + 10%) ^10 = $9.3 billion
Value of company = $9.3 billion / (9% - 10%) = N/A (since the growth rate is higher than the interest rate, the formula gives a negative value, which is not meaningful)
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