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Scrat [10]
1 year ago
10

Long Life Floors is expected to pay an annual dividend of $7 a share and plans on increasing future dividends by 2 percent annua

lly. The discount rate is 15 percent. What will the value of this stock be 5 years from today
Business
1 answer:
Vlad1618 [11]1 year ago
4 0

Answer: $60.62

Explanation:

Using the Gordon Growth model;

Value = Next dividend / (Required return - growth rate)

Next dividend in 5th year will be dividend in 6th year;

= 7 * (1 + 2%)⁶

= $7.88

Value₅ = 7.88 / (15% - 2%)

= $60.62

You might be interested in
Which of the following is false regarding the FIFO inventory method?
serious [3.7K]

Answer: All of the other answer choices are true.

Explanation:

FIFO simply refers to “First-In, First-Out” and the method assumes that the oldest goods that are in the inventory of a company have been sold first and therefore, the costs that are paid for them will be used for the calculation.

The following are true regarding the FIFO method:

• FIFO under a perpetual inventory system results in the same cost of goods sold as FIFO under a periodic inventory system.

• A company can choose to account for the flow of inventory using the FIFO method even if this doesn’t match the actual flow of its inventory.

• Perishable goods often follow an actual physical flow that is consistent with the FIFO method assumptions.

Therefore, the correct option is D as all are true.

7 0
2 years ago
Cainas Cookies purchased a commercial oven on 1/1/14 for a total cost of 35,000. Estimated useful life is 6 years, with a salvag
Anit [1.1K]

Answer:

Units of production = $4250

Straight line depreciation expense = $5,000

Double declining method = $7.777

Explanation:

The depreciation method to he used wasn't stated, so I calculated the depreciation expense using 3 depreciation methods

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

(35,000 - 5,000) / 6 = $5,000

The depreciation expense each year would be $5000

Depreciation expense using the double declining method = Depreciation factor x cost of the asset

Depreciation factor = 2 x (1/useful life)

2 / 6 = 0.3333

Deprecation expense in year 1 = 0.3333 x $35,000 = $11,666.67

Book value = $35,000 - $11,666.67 = $23,333.33

Depreciation expense in year 2 = $23,333.33 × 0.3333 = $7.777

Depreciation expense using units of production = ( hours used in year / total estimated hours of the machine) x (Cost of asset - Salvage value)

(1,700 / 12,000) x (35,000 - 5,000) = $4250

I hope my answer helps you

3 0
2 years ago
The Skunk Works home page describes this team best: "What do the world’s first stealth aircraft, the world’s most advanced fight
Oksanka [162]

Answer:

comprehensive; sequential interdependence

Explanation:

As Skunkworks believes in interaction and coordination of team members and Levittown builders work when one output of one becomes input of other.

8 0
2 years ago
Daisy Company manufactures dog collars. The following selected data relates to Daisy? Company's budgeted sales and inventory lev
Allushta [10]

Answer:

<u>Hence, 2,140 units are to be produced in November.</u>

Explanation:

November unit sales=2,300

Add: November desired ending unit finished goods inventory=720

Less: November beginning finished goods inventory (October ending inventory)=(880)

Units to be produced in November=2300+720-880=2,140

8 0
2 years ago
15. Most vegetables substantially diminish in quality in as little as _______ days.
Serjik [45]

the answer would be 14 days

Most vegetables substantially diminish in quality in as little as 14 days.

7 0
2 years ago
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