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Leviafan [203]
1 year ago
7

Shamas famous restaurants expects to pay a common stock dividend of $1.50 per share next year (d1). dividends are expected to gr

ow at a 4% rate for the foreseeable future. shamas’ common stock is selling for $18.50 per share and issuance costs are $3.50 per share. what is shamas cost of external equity?
Business
1 answer:
Tpy6a [65]1 year ago
8 0

The company's external equity comes from those funds raised from public issuance of shares or rights. The cost of external equity is the minimum rate of return which the shareholders supply new funds <span>by </span>purchasing<span> new shares to prevent the decline of the market value of the shares. To compute the cost of external equity, we should use this formula:</span> 

Ke<span> = (DIV 1 / Po) + g</span> 

Ke<span> = cost of external equity</span> 

DIV 1 = dividend to be paid next year 

Po = market price of share 

g = growth rate 

In the problem, the estimated dividend to be paid next year is $1.50. The market price is $18.50 and the growth rate is 4%. 

<span>Substituting the given to the formulas, we need to divide $1.50 by $18.50 giving us the result of 8.11% plus the growth rate; this would yield to the result of 12.11% cost of external equity.</span>

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Answer:

The amount of bond issuance is $2,085,500

Explanation:

The computation of the amount of bond issuance is shown below:

= Raise capital + attorney cost - underwriter spread

= $2,000,000 + $150,000 - 3% of $2,150,000

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= $2,150,000 - $64,500

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

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1 year ago
Colin has been directed by his boss to determine if the company is meeting customers' service quality expectations. One of Colin
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Answer:

The correct answer is intangible.

Explanation:

An intangible asset is a product or service that should not be physically delivered, but that provide us with a service. An intangible product, also called service, should not necessarily revolve around a physical product; There are also so-called pure services, that is, whoever buys a service is not buying something physical; Who buys or hires a service is paying for a transformation process.

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Neporo4naja [7]

Answer:1. The higher before tax real gain is for Steve for $2000 i.e (32,000- 30,000) while Stephanie makes $1800(6% of $30,000)

2. The higher after tax real gain is for Stephanie losing 35% of her income

which reduce her income to $1170 while Steve loss 50% of his income which reduce to $1000.

Explanation

The inflation rate is not considered in the calculation because it's constant for both parties.

4 0
1 year ago
Netflix is an internet television network that currently boasts the worldâs largest paying membership (Source: 2015 Netflix inve
Darya [45]

Answer:

As this example illustrates, companies like Netflix must engage in <u>ONGOING STRATEGIC PLANNING</u> to remain relevant and competitive in the ever-changing environment of technology advancements, social trends, and legal regulations.

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When a company develops a strategic plan, management is setting the business direction of the company. This means setting up a long term plan for the company to follow, but strategic plans cannot be fixed.

Strategic planning must always be an ongoing and fluid process, since markets are not static, nor your competitors will just sit around waiting for you to decide what to do. Your competition will constantly try to find ways to increase their market and lower yours, so you must respond accordingly.

In this case, Disney last year launched their own online service and that is going to be tough for Netflix, but if it isn't Disney, ti would be some other company.

4 0
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