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kifflom [539]
2 years ago
8

McGaha Enterprises expects earnings and dividends to grow at a rate of 28% for the next 4 years, after the growth rate in earnin

gs and dividends will fall to zero, i.e., g = 0. The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
Business
1 answer:
Sedbober [7]2 years ago
8 0

Answer:

The current price of the common stock is $29.05

Explanation:

Cost of Equity = Rf + beta x MRP = 3% + 1.20 × 5.50% = 9.6%

Dividend in the n the year = D₀ × (1+g)^n

D₁ = $1.25 × 1.25 = $1.56255

D₂ = $1.5625 × 1.25  = $1.9531

D₃ = $1.9531 × 1.25   = $2.44

D₄ = $2.44 × 1.25 = $3.052

Terminal value = D₄ × (1+g5)/r5-g5

= $3.052 x (1+0.0) ÷ (9.60 - 0.0)

= $31.79

Total value in 4th year = $3.052 + $31.79 = $34.8409

Total cash flows = $1.5625, $1.9531, $2.4414,  $34.8409

(Present value Cash-flows at 9.60% ) $1.4256, $1.6260, $1.8544, $24.1461

= $29.05

Current price = $29.05

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An MNC in a developing country is operating amidst severe space​ constraints, and the infrastructural conditions in the city are
N76 [4]

Answer: Option C

                     

Explanation: In simple words, telecommuting refers to the arrangement in which an employee of the organisation performer his or her job activities right from his or her home without going to a specified work place.

This is a modern times business technique which is used by organisations to save their costs like rent and travelling allowance to employees  that they have to bear. Such arrangement is generally made for the jobs that requires no client dealings and have specified targets set.

Thus, from the above we can conclude that the company should go for telecommuting as it will save the man hours.

6 0
2 years ago
Question 3 Lara Beal allocates wealth between two periods: youth and old age. Currently (in her youth) she has $8,000 in cash. S
Gnesinka [82]

Answer:

The correct answer is "$9450".

Explanation:

Given:

Payoff from investment,

= $6000

Lending to bank,

= 8000-5000

= 3000

Now,

At 15% interest,

The amount to be received from bank will be:

= 3000\times (1+\frac{15}{100} )

= 3000(1+0.15)

= 3000\times 1.15

= 3450 ($)

hence,

In her old age, most she can assume will be:

= 6000+3450

= 9450 ($)

4 0
2 years ago
The following information is taken from the income statement of Olympic, Inc.: Depreciation Expense $ 90,000 Amortization Expens
Lina20 [59]

Answer:

The correct option is D,$402,000.

Explanation:

In determining the cash flow provided by operating activities,we need to adjust the net income for effects of non cash items reported.It is important  to note that the reverse of the earlier treatment of the items is what is required now.For instance depreciation and amortization  were deducted in  income statement,for cash flow purposes we need to add both to net income.

Net income                          $315,000

add depreciation                $90,000

amortization                         $15,000

loss on sale of equipment  $9,000

less gain on sale of building($27000)

Cash flow from operations  $402,000

The cash flow from operating activities as adjusted is $402,000.

6 0
2 years ago
Bailey Company uses a periodic inventory system and its inventory records contain the following information: Units Total Cost Be
Gala2k [10]

Answer:

Ending inventory cost= $1,494

Explanation:

Giving the following information:

Beginning Inventory: 300 $780

Purchases:

May 10: 400 units for $1,170

June 15: 500 units for $1,260 ($2.52 per unit)

August 28: 300 units for  $990 ($3.3 per unit)

The company had 500 units were in its ending inventory at the end of the year.

Under FIFO (first-in, first-out), the ending inventory cost is calculated using the cost of the last units incorporated.

Ending inventory cost= 300*3.3 + 200*2.52= $1,494

5 0
2 years ago
Several factors can contribute to long-term organizational success. one is the establishment of a core ideology that collins and
andrew11 [14]

Original Source Material

Student Version

Merck, in fact, epitomizes the ideological nature--the pragmatic idealism--of highly visionary companies. Our research showed that a fundamental element in the "ticking clock" of a visionary company is a core ideology--core values and a sense of purpose beyond just making money--that guides and inspires people throughout the organization and remains relatively fixed for long periods of time.

References:

Collins, J. C., & Porras, J. I. (2002). Built to last: Successful habits of visionary companies. New York, NY: Harper Paperbacks.

Several factors can contribute to long-term organizational success. One is the establishment of a core ideology that Collins and Porras (2002) describe as "core values and sense of purpose beyond just making money" (p. 48). Also, the importance of a visionary leader that guides and inspires people throughout the organization and remains relatively fixed for long periods of time is hard to over emphasize.

References:

Collins, J. C., & Porras, J. I. (2002). Built to last: Successful habits of visionary companies. New York, NY: Harper Paperbacks.

Which of the following is true for the Student Version above?

Word-for-Word plagiarism

Paraphrasing plagiarism

This is not plagiarism

This is not plagiarism.

Answer: Option 3.

<u>Explanation:</u>

Plagiarism in very simple words is the copying of the content of the document that has been written by some one else in to your own document. During this copying the due acknowledgement is also not given to the document from which it has been taken.

The document that has been talked about in the question above is not an example of plagiarism. The proof for this is the due acknowledgement given to the references from whose document the content has been taken into the document.

8 0
2 years ago
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