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shtirl [24]
2 years ago
6

The CFO of a publicly traded company is expecting to pay a dividend next year of $1.25 and projecting that the price of the comp

any’s stock will be $45 in 1 year. The CFO has determined that the required rate of return for the company is 10%. Based on the data available, what is the value of one share of stock today?
Business
1 answer:
Levart [38]2 years ago
8 0

Answer:

$42.604

Explanation:

Using dividend growth model we have D1 = $1.25, dividend at end of year 1

P1 = $45 price at the end of year 1

Ke = 10% Cost of capital or expected return

g = ? the growth rate expected

Thus

D2 = D1 + g

$45 = \frac{1.25+g}{0.10-g}

$4.5 - 45g = 1.25 + g

$3.25 = 46g

7.06% = g

Now, using value of g we have

P0 = \frac{1.25}{0.10-0.0706}

Current price P0 = $42.604

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Freytag Corporation's variable overhead is applied on the basis of direct labor-hours. The company has established the following
Aleks04 [339]

Solution

Given :

Standard direct labor hours = 4.6 hours per unit

Standard variable overhead rate = $ 4.60 per hour

Actual direct labor hours worked = 9400

Actual variable overhead incurred = $ 44,940

Number of units of N06C = 2100 units

Therefore, output absorbed, V.OH = SHAO x budget OH/hr

                                                    = (2100 units x 4.6 per unit) x $ 4.60 per hour

                                                    = $ 44,436

The Input Absorbed V.OH = actual hours x budgeted OH/hour

                                            = 9400 x $ 4.60 per hour

                                            = $ 43,240

Therefore, the variable overhead rate variance is = $ 43,240 - $ 44,436

                                                                                  = $ 1196 (U)

7 0
1 year ago
A leader high in initiating structure is most likely to​ ________.
olya-2409 [2.1K]

A leader who is high in initiating structure is most likely to engage to the following;

<span>·         </span>When it comes to deadlines, the leader most likely emphasizes the meeting of this deadlines

<span>·         </span>The leader is likely to expect from its workers the standards of their performance to be maintained

7 0
2 years ago
American Bank quotes a bid rate of $0.026 and an ask rate of $0.028 for the Indian rupee (INR); National Bank quotes a bid rate
Vinvika [58]

Answer:

c. buying rupees from National Bank at the ask rate and selling them to American Bank at the bid rate.

Explanation:

  • Locational arbitrage is a strategy in which one seeks profits from the difference in exchange rates for the same currency at different banks.
  • In our case for locational arbitrage one will have to buy Indian rupee from National bank at the ask rate and then sell them to American bank at the bid rate to make profit.
3 0
2 years ago
Youngstown Construction plans to discontinue its roofing segment. Last year, this segment generated a contribution margin of $65
ipn [44]

Answer:

B. a decrease of $30,000

Explanation:

The computation of company’s overall profit is shown below:-

To continue = Contribution margin - Fixed cost

= $65,000 - $70,000

Loss = $5,000

To Discontinue =  Unavoidable fixed cost ÷ 2

= $70,000 ÷ 2

= $35,000

So, Net Loss = To continue (Loss) - To Discontinue

= $5,000 - $35,000

= $30,000

Therefore there is a decrease of $30,000

7 0
2 years ago
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