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vodomira [7]
2 years ago
11

2. Boilermaker Corp has a beta of 0.8. The market return is expected to be 15%, and the current risk-free rate is 4%. We have us

ed analysts’ estimates to determine that the market believes our dividends will grow at 5% per year and our last dividend was $1. The stock is currently selling for $12.00. What is the company’s cost of equity using the Security Market Line and using the Dividend Growth Model?
Business
1 answer:
Karolina [17]2 years ago
5 0

Answer:

Security Market Line 16%

Dividend Growth Model 13.75%

Explanation:

Boilermaker Corp

Security Market Line: Re = 4% + 0.8(15%)

=0.04+0.12

= 16%

Dividend Growth Model : Re = [1(1.05)/12.00] + 0.05

=1(0.0875)+0.05

=0.0875+0.05

= 13.75%

Therefore the company’s cost of equity using the Security Market Line is 16% and using the Dividend Growth Model is 13.75%

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The Buttercrust Pizza Company sells pizzas in two different sizes—medium and large. The number of medium pizzas sold is twice th
Ivenika [448]

Answer:

False

Explanation:

The weighted average contribution margin is calculated by multiplying individual contribution margin with respective size pizzas (i.e number of units sold) then total contribution margin (i.e of both medium and large size) is divided upon total number of units sold, see as follows:

According to Buttercrust Pizza company's sales data medium pizzas sold are twice the number of large pizzas. Now here we have to take an assumption since we aren't given actual sales units. Keeping in mind the sales data we can assume that 100 units of medium pizzas and 50 units of large pizzas are sold during the period.

Contribution margin of medium pizza: (CM× units of medium size pizzas)

Contribution margin of large pizza: (CM× units of large size pizzas)

Contribution margin of medium pizza: $10× 100 = $1000

Contribution margin of large pizza: $22× 50 = $1100

Total contribution (of both pizza sizes) = $2100

Total sales units (of both pizza sizes) = 150

The weighted average contribution margin is calculated as follows:

WACM= $2100÷ 150

WACM= $14

(Disclaimer: the solution of this question has been concluded using self-induced assumptions.)

4 0
2 years ago
Broker John is advertising a desirable property that sold months ago to attract buyers. When the buyers ask to see that property
Katyanochek1 [597]

Answer:

Bait-and-switch advertising.

Explanation:

BAIT AND SWITCH ADVERTISING is a type of advertising where a seller of a products or goods deceive a prospective buyer by advertising a product that is desirable in which when the buyer make an effort to purchase the product or ask to see the advertised product the seller will show the prospective buyer available product instead of the advertised product in which the buyer will then find out that the advertised product is unavailable just as in the case of John who advertised a desirable property that was already sold out a months ago in order to attract prospective buyers in which when the advertised product was ask by the buyers he shows the buyer available properties instead which means that this act by Broker John is an example of BAIT AND SWITCH ADVERTISING.

8 0
2 years ago
6-The founder and former CEO of Jones​ Soda, Peter van​ Stolk, claimed that sharing the core values of your loyal customer base
asambeis [7]
Insider trading your own​ company, you would study​ .
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2 years ago
Question 9 Suppose money invested in a hedge fund earns 1% per trading day. There are 250 trading days per year. What will be yo
11111nata11111 [884]

Answer:

1103.22%

Explanation:

The value of the investment at the end of the year assuming  250  trading days per year can be computed the future value formula provided below:

FV=PV*(1+daily return)^n

PV=initial investment=$100

daily return=reinvestment rate=1%

n=number of trading days in a year=250

FV=$100*(1+1%)^250

FV=$ 1,203.22

Annual return=( 1,203.22/$100)-1

Annual return=1103.22%

5 0
2 years ago
A market researcher wants to find the cause-and-effect relationship between using organic ingredients in food and the subsequent
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D online research ok
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