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Brrunno [24]
2 years ago
7

Waller Co. paid a $0.137 dividend per share in 2000, which grew to $0.55 in 2012. This growth is expected to continue. What is t

he value of this stock at the beginning of 2013 when the required return is 13.7 percent? (Round the growth rate, g, to 4 decimal places. Round your final answer to 2 decimal places.)
Business
1 answer:
Elena L [17]2 years ago
7 0

Answer:

Dividend in year 2000 (Do) = $0.137

Dividend in year 2012 (D12) = $0.55

Required return (Ke) = 13.7% = 0.137

D12 = Do(1 + g)n

$0.55 = $0.137(1 + g)12

<u>$0.55</u> = (1 + g)12

$0.137

4.0146 = (1 + g)12

12√4.0146 - 1 = g

1.1228 - 1 = g

g = 0.1228 = 12.28%  

Po = Do<u>(1 + g) </u>

            ke - g

Po = $0.55<u>(1 + 0.1228) </u>

                 0.137 - 0.1228

Po = $0.55<u>(1.1228) </u>

                   0.0142  

Po = $43.49  

Explanation:

In this case, we need to calculate the growth rate using the formula D12 = Do(1 + g)12. Then, we will calculate the current market price, which is a function of current dividend paid, subject to growth rate, divided by the excess of cost of equity over growth rate.

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Department A had a beginning inventory balance of 25 units which were 40% complete. During the accounting period, the department
GarryVolchara [31]

Answer:

the equivalent units of production is 250 units

Explanation:

The computation of the equivalent units of production is units under FIFO method is shown below:

= Opening inventory balance in units + additional units - ending inventory balance units

= 25 units + 275 units - 50 units

= 250 units

hence, the equivalent units of production is 250 units

We simply applied the above formula so that the correct value could come

And, the same is to be considered

5 0
2 years ago
The low cost of labor in other countries around the globe is a factor that business must consider because they are impacted by _
aleksandr82 [10.1K]

Answer:

The correct answer is letter "A": the social business environment.

Explanation:

The social business environment includes the society inhabitants' believes, customs, and lifestyles. It determines how businesses are handled in different regions worldwide. When it comes to low costs of labor, it might be beneficial for some companies that can open subsidiaries there to lower production costs but it also represents a struggle for some other firms because their products seem unreachable because of the low wages people earn.

7 0
2 years ago
What are three techniques stockholders can use to motivate managers to maximize their stock’s long-run price? Should managers fo
Romashka [77]

Answer:

Please see below.

Explanation:

a.

• Reasonable compensation package. Every stockholders would usually want a good return on their investments. One of the techniques that can be used by them is to offer good and reasonable compensation packages to the company's highly performing executives and managers. The aim is to spur them to act in the best interest of the stockholders and not themselves. This will also translate to better performance of the company.

• Firing of managers who don't perform well. If a company's stock is not performing well(does not appreciate), such would usually be tied to its board and managers. Stockholders are the owners of a company because their funds are being used to trade hence can threaten to replace or actually replace any manager who is not performing well. By so doing, the managers that are retained will be motivated to perform really well in order to retain their jobs hence translate to better company performance.

• Threat of hostile take over. Stockholders could also threaten a company's board of being taken over by a proven and well accomplished company , if their stock price does not improve overtime. When the managers or board realize that their job is being threatened, they will be motivated to act fast by ensuring that the company's stocks yield adequate return in the long run.

b.

What should be paramount to managers is how to ensure that their company's intrinsic stocks value(an estimate of the true value of a stock, that is premised on well calculated risk) are well maximized. The stockholders should also be carried along while this process is on going. By maximizing their stock's intrinsic value, such would bring about high value to the stocks, while as time goes on, the actual stock price will be much closer to the intrinsic value of the stocks.

6 0
2 years ago
Cost of money Four fundamental factors affect the cost of money: (1) the return that borrowers expect to earn on their investmen
notka56 [123]

Answer:

b. 1 and 3.

Explanation:

The investors are of two types either they are risk averse or risk seekers. Risk averse are those who are not willing to take risks for their investments. They accept lower returns but they are not ready to take more risks than their appetite. Risk seekers are those who demand more risk for more returns. The risks level is so high that even their whole investments can go away but they take this risk to achieve high extra ordinary returns.

8 0
2 years ago
If an adjustable-rate 30-year mortgage for $120,000 starts at 4.0 percent and increases to 5.5 percent, what is the increase in
Lelu [443]

Answer:

The increase in the monthly payment amount is $180

Explanation:

In order to calculate the increase in the monthly payment amount we would have to make the following calculation:

increase in the monthly payment amount=installment increase-installment

installment=(loan amount/1,000)*rate of interest

installment=($120,000/1,000)*4

installment=$480

installment increase=(loan amount/1,000)*rate of interest

installment increase=($120,000/1,000)*5.5

installment increase=$660

increase in the monthly payment amount=$660-$480

increase in the monthly payment amount=$180

The increase in the monthly payment amount is $180

7 0
2 years ago
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