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Kamila [148]
2 years ago
13

NCH Corporation, which markets cleaning chemicals, insecticides and other products, paid dividends of $2.00 per share in 1993 on

earnings of $4.00 per share. The book value of equity per share was $40.00, and earnings are expected to grow 6% a year in the long term. The stock has a beta of 0.85, and sells for $60 per share. (The treasury bond rate is 7%.). How much would the return on equity have to increase to justify the price/book value ratio at which NCH sells for currently?
Business
1 answer:
sashaice [31]2 years ago
4 0

Answer:

The reutrn on equity should be of 9.53%

Explanation:

We can solve the return on equity by considering the gordon model of dividend growth:

\frac{divends_1}{return_{equity}-growth} = Intrinsic \: Value

current dividends 2 dollars

next year dividends: current x (1 + g) = 2 x (1 + 0.06) = 2.12

\frac{2.12}{return_{equity}-0.06} = 60

\frac{2.12}{60} +0.06= Ke

Ke = 0.09533 = 9.53%

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What process guides your entry and closing points? 1. Reducing the randomness of your approach 2. Pragmatic 3. Facilitate adapta
Airida [17]

Answer:

1. Reducing the randomness of your approach

Explanation:

Reducing the randomness of your approach guides your entry and closing points

8 0
2 years ago
President Chris Zane mentions that employees' performance is not evaluated every six months or every year as in many organizatio
dsp73

Answer:

This question is incomplete, the options are missing. The options are the following:

a) Discuss failures of individuals of the company

b) Establish performance standards as a group

c) Measure, evaluate and take corrective action

d) Correct employees' actions by berating and celebrating

e) Cross-train employees

And the correct answer is the option C: measure, evaluate and take corrective action.

Explanation:

To begin with, when it comes to terms of control regarding the inside structure of an organization, the managers use different processes and techniques to take on that job of controlling the employes of the company in order to see how everything is going. In the case of Chris Zane, as he wants to do a control every week, then he is absolutely interesting in evaluating and measuring the improvements of every one inside the business so in that way he can take action in time to correct something if it is not going as planned. And that is the main reason why he would use a controlling process where he needs to have everything going as planned.

3 0
2 years ago
On July 16, 2019, Logan acquires land and a building for $500,000 to use in his sole proprietorship. Of the purchase price, $400
stellarik [79]

Answer and Explanation:

The computation is shown below:

a) The adjusted basis for the land and the building at the acquisition date is

Land = $100,000

Building = $400,000

We recognized the purchase price of land and building

b. And, the adjusted basis for the land and the building at the end of 2019 is

Land = $100,000

Building is

= $400,000 - $4,708

= $395,292

We considered the cost recovery   for the computation above

4 0
2 years ago
Suppose a firm is producing in the long run. When it produces 4,000 units of output, its total cost is $8,000. When it produces
Scilla [17]

Answer:

increasing then decreasing

Explanation:

production level            total cost             average total cost

4,000                               $8,000                    $2.00

4,200                               $8,200                     $1.95

4,400                               $8,800                    $2.00

Returns to scale measure the change in productivity, or how much input is needed to produce a unit of output.

  • increasing returns to scale: output increases in a greater proportion than inputs
  • constant returns to scale: output increases in the same proportion as inputs
  • decreasing returns to scale: output increases in a lower proportion than inputs

Since first the average total cost decreased, total output increased in a greater proportion than inputs ⇒ increasing returns of scale. But then the situation reversed and total output increased in a lower proportion than inputs ⇒ decreasing returns of scale.

4 0
2 years ago
XYZ borrowed $50,000 this year. Half of the loan will be repaid next year and the remainder will be paid the following year. How
finlep [7]

Answer:

The answer is given below;

Explanation:

                                              XYZ

                                        Extracts from Balance Sheet

                                        As at XXXXX

Current Liabilities

Current  portion of long term loan     *$25,000

Long Term Liabilities

Long Term Loan                                   $25,000

As the 50% of the loan will be repaid in next year, therefore ($50,000/2) will be shown in current liabilities. The rest of the  loan is shown  as long term loan as it will be repaid after 12 months.

4 0
2 years ago
Read 2 more answers
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