An experiment was conducted to evaluate the success of an Ebola virus vaccine. The subjects were unaware of the treatment they were given. What is this type of blinding used to prevent?

Answers

Answer 1

This type of blinding is used to prevent what is referred to as placebo effect in this scenario.

What is Placebo effect?

This refers to a situation where some individuals feel improvement in their health when dummy treatment is used.

The subjects not being unaware of the treatment helps to prevent the placebo effect thereby making it the most appropriate choice.

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Related Questions

A small-business Web site contains 100 pages and 60%, 30%, and 10% of the pages contain low, moderate, and high graphic content, respectively. A sample of four pages is selected without replacement, and X and Y denote the number of pages with moderate and high graphics output in the sample. Determine: a. fxy(x, y) b. fx(x) c. E(X) d. fyß(y) e. E(Y | X = 3) g. Are X and Y independent?

Answers

Answer:

Step-by-step explanation:

Given that:

A small-business Web site contains 100 pages and 60%, 30%, and 10%  of the pages contain low, moderate, and high graphic content, respectively.

. A sample of four pages is selected without replacement,

Let  X and Y denote the number of pages with moderate and high graphics output in the sample

We are meant to determine

a)  [tex]f_{XY}(x, y)[/tex]  from the given data in the question;

However; the probability mass function can be expressed via the relation:

[tex]f_{XY}(x,y) = \dfrac{(^{30} _x ) ( ^{10} _y ) (^{60} _ {4-x-y} ) }{ ( ^{100}_4)}[/tex]

We can now have a table shown as :

[tex]X|Y[/tex]                0           1               2              3              4          Total    [tex]f_X(x)[/tex]

0              0.1244     0.0873     0.02031    0.0018     0.0001   0.234

1               0.2618     0.13542   0.02066    0.00092    0         0.419

2              0.1964     0.0666    0.00499       0              0         0.268

3              0.0621     0.01035     0                 0              0         0.073

4              0.0069       0              0                0              0          0.007

Total [tex]F_Y(y)[/tex]   0.6516   0.2996   0.0460      0.0028  0.0001    1

b) [tex]f_X(x)[/tex]

The marginal distribution definition of [tex]f_X(x)[/tex][tex]= P(X=x)[/tex]

[tex]f_X(x)[/tex] [tex]= \sum P(X=x, Y=y)[/tex]

From the table above ; the corresponding values of [tex]f_X(x)[/tex]  are :

X           0           1         2          3           4

[tex]f_X(x)[/tex]    0.234   0.419  0.268   0.073    0.007

( since [tex]f_X(x)[/tex] represent the vertical column)

c) E(X)

By using the expression [tex]E(x) = \sum ^4 _{x= 0} x f_X(x)[/tex]

we have:

E(X) = [tex]0*0.234+1*0.419+ 2*0.268+3*0.073+4*0.007[/tex]

E(X) = 0 + 0.419 + 0.536 + 0.218 + 0.028

E(X) = 1.202

d) fyß(y)

Using the thesis of conditional Probability; we have :

[tex]P(A|B) = \dfrac{ P(A,B) }{ P(B) }[/tex]

The conditional probability for the mass function is then:

[tex]f_{Y|X=3}(y) = \dfrac{f_{XY}(3,y)}{f_{X}(x)}[/tex]

where;

[tex]f_X(3) = 0.0725[/tex]

values of [tex]f_{XY} (3,y)[/tex] for every y ∈ (0,1,2,3,4)

Therefore; the mass function is:

[tex]Y|{_X_3}:\left[\begin{array}{ccccc}0&1&2&3&4\\0.857&0.143&0&0&0\\ \end{array}\right][/tex]

e) E(Y | X = 3)

By using the expression [tex]E(Y|X=3) = \sum ^4 _{y= 0} y f_{y \beta} \ (y|x)[/tex]

we have:

⇒ [tex]0 * 0.857 + 1*0.143 +0 +0+0[/tex]

= 0.143

The value of E(Y | X = 3) = 0.143

g) Are X and Y independent?

To Check if X and Y independent; Let assume if [tex]f_{XY}(x,y) = f_X(x)f_{Y}(y)[/tex] ; then we can say that X and Y are independent.

From the above previous table :

[tex]f_{(XY)} (0.4) = 0.0001[/tex]

[tex]f_X (0)[/tex] = 0.1244 + 0.087268+0.02031+ 0.001836 + 0.0001

[tex]f_X (0)[/tex]  = 0.234

[tex]f_X (4)=0.0001 +0+0 \\ \\ = 0.001[/tex]

[tex]f_{X}(0) f_Y(4) = 0.234*0.0001[/tex]

[tex]f_{X}(0) f_Y(4) = 0.00002[/tex]

We conclude that [tex]f_{(XY)} (0.4) \neq f_X(0) f_Y(y)[/tex]; As such X and Y are said to be  non - independent.

An OSU senior is studying for exams in psychology and economics. The student has time to read 50 pages of psychology and 10 pages of economics. Or, in the same amount of time the student could read 30 pages of psychology and 70 pages of economics. How many pages of economics can the student read instead of reading just 1 page of psychology

Answers

Answer:

3 Pages

Step-by-step explanation:

Let the pages of economics read = eLet the pages of psychology read = pLet the total time taken on each instance=t

In the first instance, the student has time to read 50 pages of psychology and 10 pages of economics.

t=50p+10e

The student could read 30 pages of psychology and 70 pages of economics.

t=30p+70e

Since the two situations take the same amount of time, we have:

50p+10e=30p+70e

Collect like terms

50p-30p=70e-10e

20p=60e

Divide both sides by 20

p=3e

Therefore, in the time it will take the student to read 1 page of psychology, the student can read 3 pages of economics.

The pressure p(in lbs/in^2) that a 160 pound persons shoe exerts on the ground when walking varies inversely with the area A(in in^2) of the sole of the shoe when the shoes have a sole area of 40 in^2 The pressure is 4 lbs/in^2 find equation that relates these variables


A=

Answers

Answer:

[tex]A = \dfrac{40}{P}[/tex]

Step-by-step explanation:

Pressure [tex]p(in lbs/in^2)[/tex]  varies inversely with the area [tex]A(in$ in^2)[/tex] of the sole of the shoe.

This is written as:

[tex]P \propto \frac{1}{A}\\ $Introducing the constant of variation$\\P = \dfrac{k}{A}[/tex]

When:

[tex]When: A= 40 in^2, P =4 lbs/in^2\\$Substituting into the equation\\P = \dfrac{k}{A}\\4 = \dfrac{k}{40}\\$Cross multiply\\k=4*40\\k=160\\Therefore, the equation that connect these variables is given as:\\P = \dfrac{40}{A}\\$In terms of P\\AP=40\\\\A = \dfrac{40}{P}[/tex]

Express the function G in the form f∘g. (Enter your answers as a comma-separated list. Use non-identity functions for
f(x) and g(x).)

Answers

Answer:

i dont really know what it is

I WILL GIVE BRAINLIEST PLEASE ANSWER ASAP!!!
If the measure of angle 2 is (5 x + 14) degrees and angle 3 is (7 x minus 14) degrees, what is the measure of angle 1 in degrees?

2 lines intersect to form 4 angles. From top left, clockwise, the angles are 1, 2, 3, 4.
88 degrees
89 degrees
90 degrees
91 degrees

Answers

Answer:

<1 = 91

Step-by-step explanation:

<2 + <3 = 180

5 x + 14 +  (7 x -14) = 180

Combine like terms

12x = 180

Divide by 12

12x/12 = 180/12

x =15

We want <1

<1 = <3 since they are vertical angle

<1 = 7x-14 = 7*15 -14 =105-14=91

Answer:

D, 91 degrees

Step-by-step explanation:

First, solve for x. Angles 2 and 3 add up to 180, so set up an equation:

(5x + 14) + (7x - 14) = 180

12x = 180

x = 15

Then, you know angles 1 and 2 also add up to 180, so solve for Angle 2

5(15) + 14= 89

180-89= 91, so angle 1 is 91 degrees.

What’s the correct answer for this?

Answers

Answer:

1) Antonio's statement

2) <A = 123

Step-by-step explanation:

1) Antonio's statement is incorrect. This is because the opposite angles of a quadrilateral add up to 180°. Erin was incorrect because the opposite angles of this quadrilateral are unequal.

2) 2x+7+5x-2 = 180° (opposite angles of quadrilateral)

Now

7x+5 = 180

7x = 175

x = 25

<A = 5x-2

= 5(25)-2

= 125-2

= 123

Please answer this correctly

Answers

Answer:

=3651 km^2

Step-by-step explanation:

The rectangle at the top is 11 km by 32 km

The area is 11*32 =352

The rectangle at the bottom is 9 km by 11 km

The area is 9*11 = 99

Add the two areas together

352+99 =451 km^2

What’s the correct answer for this question?

Answers

Volume of cone : V=1/3pie r^2h

Answer:

A

Step-by-step explanation:

Volume of cone = (1/3) πr²h

TWO PLANES INTERSECT IN A
A. point
B. Ray
C. Line
D. Line segments

Answers

Answer:

c. line

Step-by-step explanation:

the intersection of two planes is called a line

Answer:

Hello dear,

two planes intersect and forms line

so yaa your answer is C)

Hope I helped you ;)

please thank me !!!

satsriakal ji

Solve for x
A) 5
B) 6
C)7
D)8

Answers

Answer:

[tex]7x+1+6x+101=180\\13x=78\\x=6[/tex]

Simplify the expression 4x^3 2x^3

Answers

Answer:

Step-by-step explanation:

2 3x6

the 3 is an exponet so supost to be smaller

the answer-  2^3 x^6

i think its right

Please answer this correctly

Answers

Answer:

452

Step-by-step explanation:

plz mark brainliest!

Answer:

i'll say you have to multiple 9 by 9 than 5 by 5 BUT 23 25 13 and 7 IDK sorry hope i helped :)

Step-by-step explanation:

A car is driving at 75 kilometers per hour. How far, in meters, does it travel in 5 seconds?

Answers

75km convert to m 75x1000=75000m

converted I hour to seconds that is 3600seconds

If 75000m=3600seconds

? =5seconds

that id 75000x5=375000/3600

=104.26…metres

The distance will be 104.16 meters if the car is driving at 75 kilometers per hour.

What is the distance?

Distance is a numerical representation of the distance between two items or locations. Distance refers to a physical length or an approximation based on other physics or common usage considerations.

It is given that:

A car is driving at 75 kilometers per hour.

Let x be the distance.

As we know from the distance time relation:

Distance = speed×time

Speed = 75 km/h

Speed = 75 km/(3600)seconds

Speed = 0.0208 km/s

x = 0.0208×5

x = 0.10416 km

in meters

x  = 0.104x1000

x = 104.16 meters

Thus, the distance will be 104.16 meters if the car is driving at 75 kilometers per hour.

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What is the distance between the following points?

Answers

Answer:

square root of 72

Step-by-step explanation:

Answer:

(c) square root of 72

Step-by-step explanation:

khan academy answer :)

Which of the following describes the function x^3-8

Answers

Answer:

Is there any options if so just repost with the options and i will answer it

Step-by-step explanation:

What is X:
3x−22=44
5/6 = 10/2x−3

Answers

Answer:

x = 22

x = 4,6

Step-by-step explanation:

3x - 22 = 44

3x = 44 + 22

3x = 66

x = 66/3

x = 22

5/6 = 10/2x - 3

5/6 + 3 = 10/2x

5/6 + 18/6 = 10/2x

23/6 = 10/2x

23/6 * 2 = 10x

46 = 10x

x = 46/10

x = 4,6

what is the solution set for the equation (x+3)(x-8)=0

Answers

Answer:

x = -3        x=8

Step-by-step explanation:

(x+3)(x-8)=0

Using the zero product property

x+3 =0   x -8 = 0

x = -3        x=8

Determine if two lines are parallel or perpendicular by comparing slopes
Question
Use slopes and y-intercepts to determine if the lines x = -1 and x = 0 are parallel.
Select the correct answer below:
Parallel
Not Parallel


Answers

Answer:

They are parallel because they are vertical lines, and all vertical lines are parallel.

Step-by-step explanation:

The breaking strength of a rivet has a mean of 10,000 psi and a standard deviation of 714.2857 psi. What is the probability that the sample mean breaking strength for a random sample of 49 rivets is between 9,832 and 10,200?

Answers

Answer:

[tex] z= \frac{9832- 10000}{\frac{714.2857}{\sqrt{49}}}= -1.646[/tex]

[tex] z= \frac{10200- 10000}{\frac{714.2857}{\sqrt{49}}}= 1.96[/tex]

And we can use the normal standard distribution table or excel and we can  find the probability with this difference:

[tex] P(-1.646 <z< 1.96) =P(z<1.96) -P(z<-1.646) =0.975-0.0499= 0.9251[/tex]

Then the probability that the sample mean breaking strength for a random sample of 49 rivets is between 9,832 and 10,200 is 0.9251

Step-by-step explanation:

For this case we have the following info given:

[tex] \mu = 10000[/tex] represent the mean

[tex] \sigma = 714.2857[/tex] represent the deviation

[tex] n = 49[/tex] represent the sample size selected

For this case since the sample size is large enough n>30 we have enough evidence to use the central llmit theorem and the distribution for the sample mena would be given by:

[tex] \bar X \sim N(\mu,\frac{\sigma}{\sqrt{n}}) [/tex]

And we want to find the following probability:

[tex] P(9832 < \bar X< 10200)[/tex]

And we can use the z score formula given by:

[tex] z = \frac{\bar X -\mu}{\frac{\sigma}{\sqrt{n}}}[/tex]

And if we use the z score formula for the limits  given we got:

[tex] z= \frac{9832- 10000}{\frac{714.2857}{\sqrt{49}}}= -1.646[/tex]

[tex] z= \frac{10200- 10000}{\frac{714.2857}{\sqrt{49}}}= 1.96[/tex]

And we can use the normal standard distribution table or excel and we can  find the probability with this difference:

[tex] P(-1.646 <z< 1.96) =P(z<1.96) -P(z<-1.646) =0.975-0.0499= 0.9251[/tex]

Then the probability that the sample mean breaking strength for a random sample of 49 rivets is between 9,832 and 10,200 is 0.9251

In this diagram, BAC – EDF. If the
area of BAC = 24 in2, what is the
area of EDF?
Help please

Answers

The triangles are congruent. So.

Triangle ABC is 24 inch^2 and BC is 4 inches.
The area of a triangle is 0.5 x base x height. The will be 12 because 12 x 4 x 0.5 which equals 24.

Triangle DEF is half the size of ABC because bc is 4 and EF is 2 showing it’s half. This then means the height will be half which then mean it will be 6.

This then means we can use the equation to work it out. So. 6 x 0.5 x 2 = 6in^2

The answer is 6inches^2

If the area of ΔBAC = 24 in², the area of ΔEDF is 6 in².

What are similar triangles?

If two triangles' angles are congruent and their corresponding sides are proportionate, they are considered similar. To put it another way, similar triangles are the same in shape but not necessarily in size. If ΔPQR and ΔMNO are two similar triangles, then we can write it as ΔPQR ∼ ΔMNO.

Statement:

The square of the ratio of any pair of their respective sides is equal to the ratio of the areas of two similar triangles.

How to solve this problem?

Since ΔBAC ∼ ΔEDF, we can use the above statement to find the area of ΔEDF. Let the area of ΔEDF be x in². Given that length of EF and BC is 2 in and 4 in respectively.

So, we have to solve this equation,

24/x = 4²/2²

Now, 24/x = 16/4

i.e. 24/x = 4

i.e. 4x = 24

i.e. x = 24/4 = 6

Therefore the area of ΔEDF is 6 in².

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Jose predicted that he would sell 48 umbrellas. He actually sold 72 umbrellas.What are the values of a and b in the table below. Round to the nearest tenth if necessary

Answers

Answer:

The answer is A

Step-by-step explanation:

Is a measure of 22 inches​ "far away" from a mean of 16 ​inches? As someone with knowledge of​ statistics, you answer​ "it depends" and request the standard deviation of the underlying data. ​(a) Suppose the data come from a sample whose standard deviation is 2 inches. How many standard deviations is 22 inches from 16 ​inches? ​(b) Is 22 inches far away from a mean of 16 ​inches? ​(c) Suppose the standard deviation of the underlying data is 4 inches. Is 22 inches far away from a mean of 16 ​inches?

Answers

Answer:

a) 3 standard deviations above 16

b) More than 2 standard deviations of the mean, so yes, 22 inches is faw away from the mean of 16 inches.

c) Less than 2 standard deviations, so not far away.

Step-by-step explanation:

Z-score:

In a set with mean [tex]\mu[/tex] and standard deviation [tex]\sigma[/tex], the zscore of a measure X is given by:

[tex]Z = \frac{X - \mu}{\sigma}[/tex]

The Z-score measures how many standard deviations the measure is from the mean. After finding the Z-score, we look at the z-score table and find the p-value associated with this z-score. This p-value is the probability that the value of the measure is smaller than X, that is, the percentile of X. Subtracting 1 by the pvalue, we get the probability that the value of the measure is greater than X.

If Z < -2 or Z > 2, X is considered to be far away from the mean.

In this question, we have that:

[tex]\mu = 16[/tex]

​(a) Suppose the data come from a sample whose standard deviation is 2 inches. How many standard deviations is 22 inches from 16 ​inches?

This is Z when [tex]X = 22, \sigma = 2[/tex].

So

[tex]Z = \frac{X - \mu}{\sigma}[/tex]

[tex]Z = \frac{22 - 16}{2}[/tex]

[tex]Z = 3[/tex]

So 22 inches is 3 standard deviations fro 16 inches.

​(b) Is 22 inches far away from a mean of 16 ​inches?

3 standard deviations, more than two, so yes, 22 inches is far away from a mean of 16 inches.

(c) Suppose the standard deviation of the underlying data is 4 inches. Is 22 inches far away from a mean of 16 ​inches?

Now [tex]\sigma = 4[/tex]

[tex]Z = \frac{X - \mu}{\sigma}[/tex]

[tex]Z = \frac{22 - 16}{4}[/tex]

[tex]Z = 1.5[/tex]

1.5 standard deviations from the mean, so 22 inches is not far away from the mean.

Given cot ø = 4/3. Find the other two reciprocal trigonometic ratios. 1) scs 2) sec

Answers

Answer:

csc ø = 5/3 ; sec ø = 5/4

Step-by-step explanation:

cot ø = adj/opp

adj = 4

opp = 3

after that, we must find the hypotenuse by using phytagoras theorem

hpy² = adj² + opp²

hpy² = 4² + 3²

hpy² = 25

hpy = 5

now let's find the other

csc ø (not scs) = hyp/opp = 5/3

sec ø = hyp/adj = 5/4

Question: A box contains 160 Iphone XR's.
60% of the IPhones are Forest Green.
How many IPhones are Forest Green?

Answers

Answer:

96

Step-by-step explanation:

60% * 160 = 0.6 * 160 = 96.

Answer:

None

Step-by-step explanation:

There is no Forest Green iPhone XR's only the 11 Pros have that color.

(X+3)/6=5/4 what is x

Answers

Answer:

x = 9/2

Step-by-step explanation:

(x+3)/6=5/4

(x+3)/6*6=5/4*6

x+3=30/4

x+3-3=30/4-3

x=9/2

A water cooler holds 15 liters of sports drink. Approximately how many gallons is this

Answers

The correct Anwser it is about 4 gallons because in 1 gallon tgere is 3.75 liters

Which of the following statements best describes the concept of a function?

Group of answer choices
For a given input value, there is, at most, one output value.

For a given output value, there is, at most, one input value.

For a given input value, there may be more than one output value.

There is no relationship between the input and output values.

Answers

Answer:

For a given output value, there is, at most, one input value

Step-by-step explanation:

Given: the concept of function

To find: the statement that best describes the concept of a function

Solution:

A function is a relation in which every value of the domain has a unique image in the codomain.

Input value belongs to the domain and output value belongs to the codomain.

The statement ''For a given output value, there is, at most, one input value'' describes the concept of a function

The statement best describes the concept of a function is

For a given output value, there is, at most, one input value.

Function :

A relation is a function when each input has exactly only one output

Concept :

Domain x is the input and range y is the output

In a function , each input x must have exactly only one output.

Input x cannot have two outputs.

The statement best describes the concept of a function is

For a given output value, there is, at most, one input value.

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A parabola has a focus of (6,–6) and a directrix of y = –2. Which of the following could be the equation of the parabola?

Answers

Answer:

[tex]-8(y+4) =(x-6)^{2}[/tex]  

Step-by-step explanation:

The standard form of a parabola is given by the following equation:

[tex](x-h)^{2} =4p(y-k)[/tex]

Where the focus is given by:

[tex]F(h,k+p)[/tex]

The vertex is:

[tex]V=(h,k)[/tex]

And the directrix is:

[tex]y-k+p=0[/tex]

Now, using the previous equations and the information provided by the problem, let's find the equation of the parabola.

If the focus is (-6,6):

[tex]F=(h,k+p)=(6,-6)[/tex]

Hence:

[tex]h=6\\\\k+p=-6\hspace{10}(1)[/tex]

And if the directrix is [tex]y=-2[/tex] :

[tex]-2-k+p=0\\\\k-p=-2\hspace{10}(2)[/tex]

Using (1) and (2) we can build a 2x2 system of equations:

[tex]k+p=-6\hspace{10}(1)\\k-p=-2\hspace{10}(2)[/tex]

Using elimination method:

(1)+(2)

[tex]k+p+k-p=-6+(-2)\\\\2k=-8\\\\k=-\frac{8}{2}=-4\hspace{10}(3)[/tex]

Replacing (3) into (1):

[tex]-4+p=-6\\\\p=-6+4\\\\p=-2[/tex]

Therefore:

[tex](x-6)^{2} =4(-2)(y-(-4)) \\\\(x-6)^{2} =-8(y+4)[/tex]

So, the correct answer is:

Option 3

 

According to a polling​ organization, 22​% of adults in a large region consider themselves to be liberal. A survey asked 200 respondents to disclose their political​ philosophy: Conservative,​ Liberal, Moderate. Treat the results of the survey as a random sample of adults in this region. Do the survey results suggest the proportion is higher than that reported by the polling​ organization? Use an alphaequals0.01 level of significance.

Answers

Answer:

No. There is not enough evidence to support the claim that the proportion of liberals is higher than that reported by the polling​ organization (P-value = 0.0366).

Step-by-step explanation:

The question is incomplete: there is no information about the results of the survey. We will assume that 55 of the subjects answer "liberal", and test the claim.

This is a hypothesis test for a proportion.

The claim is that the proportion of liberals is higher than that reported by the polling​ organization.

Then, the null and alternative hypothesis are:

[tex]H_0: \pi=0.22\\\\H_a:\pi>0.22[/tex]

The significance level is 0.01.

The sample has a size n=200.

The sample proportion is p=0.275.

[tex]p=X/n=55/200=0.275[/tex]

The standard error of the proportion is:

[tex]\sigma_p=\sqrt{\dfrac{\pi(1-\pi)}{n}}=\sqrt{\dfrac{0.22*0.78}{200}}\\\\\\ \sigma_p=\sqrt{0.000858}=0.029[/tex]

Then, we can calculate the z-statistic as:

[tex]z=\dfrac{p-\pi-0.5/n}{\sigma_p}=\dfrac{0.275-0.22-0.5/200}{0.029}=\dfrac{0.053}{0.029}=1.792[/tex]

This test is a right-tailed test, so the P-value for this test is calculated as:

[tex]\text{P-value}=P(z>1.792)=0.0366[/tex]

As the P-value (0.0366) is greater than the significance level (0.01), the effect is  not significant.

The null hypothesis failed to be rejected.

There is not enough evidence to support the claim that the proportion of liberals is higher than that reported by the polling​ organization.

Little Equipment for Hire is a subsidiary in the Giant Machinery and currently under the liquidation plan due to the severe contraction of operation due to corona virus. The company plans to pay total dividend of $2.5 million now and $ 7.5 million one year from now as a liquidating dividend. The required rate of return for shareholders is 12%. Calculate the current value of the firm’s equity in total and per share if the firm has 1.5 million shares outstanding. (4 marks)

Answers

Complete Question:

The Giant Machinery has the current capital structure of 65% equity and 35% debt. Its net income in the current year is $250 000. The company is planning to launch a project that will requires an investment of $175 000 next year. Currently the share of Giant machinery is $25/share. Required: a. How much dividend Giant Machinery can pay its shareholders this year and what is dividend payout ratio of the company. Assume the Residual Dividend Payout Policy applies? b. If the company is paying a dividend of $2.50/share and tomorrow the stock will go ex-dividend. Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 15%? c. Little Equipment for Hire is a subsidiary in the Giant Machinery and currently under the liquidation plan due to the severe contraction of operation due to corona virus. The company plans to pay total dividend of $2.5 million now and $ 7.5 million one year from now as a liquidating dividend. The required rate of return for shareholders is 12%. Calculate the current value of the firm’s equity in total and per share if the firm has 1.5 million shares outstanding?

Answer:

a) Total dividend for the current year = $136,250

Dividend Payout Ratio = 0.545

b) Ex-dividend price = $22.875

c) Total current value = $9,196,428.57

Current value per share = $6.13

Step-by-step explanation:

a) Equity = 65%

Debt = 35%

Net Income for year 0 = $250,000

proposed Investment for year 1= $175,000

Current price = $25/share

Tax on dividend = 15%

Total dividend for year 0 = 250000 - (65% of 175000)

Total dividend for year 0= 250000 - 113750

Total dividend for the current year = $136,250

Dividend Payout Ratio = total dividends/ total earning

Dividend Payout Ratio = 136250/250000

Dividend Payout Ratio = 0.545

b) Dividend = $2.5/ share

Ex-dividend price = current price - Dividend * (1-tax on dividend)

Substituting the appropriate values:

Ex-dividend price = 25 - 2.5 * (1-15%)

Ex-dividend price = 25 - 2.125

Ex-dividend price = $22.875

c) Current value of the firm = Dividend paid in year 0 + (Dividend to be paid in year 1/discount rate)

Dividend paid in year 0 = $2,500,000

Dividend to be paid in year 1 = $7,500,000

Discount rate = 12%

Total current value = 2,500,000 + (7,500,000 / 1.12)

Total current value = $9,196,428.57

Numbe of shares = 1,500,000

Current value per share = Total current value / number of shares

Current value per share = 9,196,428.57/1,500,000

Current value per share = $6.13

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