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Lemur [1.5K]
2 years ago
10

Gator Tires pays a constant annual dividend of $1.21 per share. How much are you willing to pay for one share if you require a r

ate of return of 9.3 percent
Business
1 answer:
lora16 [44]2 years ago
3 0

Answer:

I will pay $13 for one share

Explanation:

Dividend Valuation method is used to value the stock price of a company based on the dividend paid, its growth rate and rate of return. The price is calculated by calculating present value of future dividend payment.

Formula to calculate the value of stock

Price = Dividend / ( Rate or return - growth rate )

Due to constant payment of dividend there is no growth in the dividend

Price = $1.21 / ( 9.3% - 0% )

Price = $1.21 / 9.3%

Price  = $13

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A bond has a face value of $1,000, a coupon of 4% paid annually, a maturity of 30 years, and a yield to maturity of 7%. What rat
Lelechka [254]

Answer:

-11.8%

Explanation:

the key to answer this question is to remember that valuation of a bond depends basically of calculating the present value of a series of cash flows, so let´s think about a bond as if you were a lender so you will get interest by the money you lend (coupon) and at the end of n years you will get back the money you lend at the beginnin (principal), so applying math we have the bond value given by:

price=\frac{principal*coupon}{(1+i)^{1} }+ \frac{principal*coupon}{(1+i)^{2} } \frac{principal*coupon}{(1+i)^{3} }+...+\frac{principal+principal*coupon}{(1+i)^{n} }

so in this particular case that one year later there are 29 years to maturity so we have:

price=\frac{1,000*0.04}{(1+0.08)^{1} }+ \frac{1,000*0.04}{(1+0.08)^{2} } \frac{1000*0.04}{(1+0.08)^{3} }+...+\frac{1,000+1,000*0.04}{(1+0.08)^{30} }

price=553.6638

so as we have a higher rate the investment has the next return:

return=\frac{553.66}{627.73} -1

return=-11.8\%

4 0
2 years ago
The following data relate to direct materials costs for February: Materials cost per yard: standard, $2.00; actual, $2.10 Standa
Arlecino [84]

Answer:

Price variance will be $4512.5 ( Unfavorable )

Explanation:

We have given standard material cost per yard = $2

Actual material cost per yard = $2.10

Standard yards per unit = 4.5

And actual yards per unit = 4.75

Units of production = 9500

Total number of actual quantity used = 9500×4.75 = 45125

So direct material price variance = ( standard price - actual price ) × actual quantity used = ( $2 - $2.1 ) × 45125 = -$4512.5

So price variance will be $4512.5 ( Unfavorable )

6 0
2 years ago
A(n _____ contract carries the least risk for suppliers.
Mandarinka [93]
The contract that carries the least risk for suppliers is CPPC. In this type of contract the buyer pays the supplier for allowable performance cost and pre-determined percentage based on total cost. The full meaning of CPPC is Cost Plus Percentage of Cost.
3 0
2 years ago
If your risk-aversion coefficient is A = 4.4 and you believe that the entire 1926–2015 period is representative of future expect
tamaranim1 [39]

Answer:

=> fraction of the portfolio that should be allocated to T-bills = 0.4482 = 44.82%.

=> fraction to equity = 0.5518 = 55.18%.

Explanation:

So, in this question or problem we are given the following parameters or data or information which are; that the utility function is U = E(r) – 0.5 × Aσ2 and the risk-aversion coefficient is A = 4.4.

The fraction of the portfolio that should be allocated to T-bills and its equivalent fraction to equity can be calculated by using the formula below;

The first step is to determine or Calculate the value of fraction to equity.

Hence, the fraction to equity = risk premium/(market standard deviation)^2 - risk aversion.

= 8.10% ÷ [(20.48%)^2 × 3.5 = 0.5518.

Therefore, the value for fraction of the portfolio that should be allocated to T-bills = 1 - fraction to equity = 1 - 0.5518 =0.4482 .

8 0
2 years ago
Meng Co. maintains a $300 petty cash fund. On January 31, the fund is replenished. The accumulated receipts on that date represe
Len [333]

Answer:

A. Dr. Office Supplies, $80; Dr. Merchandise inventory, $160; Dr. Miscellaneous expenses, $20; Dr. Cash over and short, $8; Cr. Petty cash, $268.

Explanation:

$80 for office supplies, $160 for merchandise inventory, and $20 for miscellaneous expenses are all expense accounts which need to be debited for settlement. Cash Shortage account is debited by $8 to record the cash shortage effect. The total of all these account will be credited in cash account.

7 0
2 years ago
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