Moonshine Industries Has Produced a Barrel Per Week for the Past

question 60

Essay

Moonshine Industries has produced a barrel per week for the past 20 years but cannot grow because of certain legal hazards.It earns $25 per share per year and pays it all out to stockholders.The stockholders have alternative,equivalent-risk ventures yielding 20% per year on average.How much is one share of Moonshine worth? Assume the company can keep going indefinitely.

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Definitions:

Public Good

A commodity or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

Private Firms

Businesses owned and controlled by individuals or groups of individuals, as opposed to being owned by the government.

Property Rights

Legal rights to possess, use, and dispose of assets including real property (land and buildings) and intellectual property.

Fundamental Function

A basic or essential function that is fundamental to a system or process.