River City Recycling just paid its annual dividend of $1.15 per share. The required return is 12.3 percent and the dividend grow
1 answer:
Answer:
10.34
Explanation:
This question refers to Dividend Growth Rate with respect to Stock valuation
The model estimates the dividends over a defined period based on an assumed growth rate to determine the future value of the stock.
The formular to calculating the expected value is as follows
Please note:
Expected return and Rate are expressed in percentage i.e divided by 100.
Fitting into the formular:
The resulting answer = 10.34
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Answer:
Net income will increase by $11,250
Explanation:
Provided information,
Current sales = 75,000 units which represents 80% capacity
Therefore, 100% capacity =
Fixed cost at 100% capacity = $1.25 93,750 = $117,187.50
Therefore,
Current net income
Sales = 75,000 $7.00 = $525,000
Less: Variable cost = 75,000 $3.50 = $262,500
Less: Fixed Cost = $117,187.50
Net Operating Income = $145,312.50
Now with the additional order, which is of 15,000 units the additional ideal capacity of 20% will be utilized, further no fixed cost will be incurred, as the entire fixed cost for 100% capacity is utilized, thus
Sales = 15,000 $3 = $45,000
Less: Variable cost = 15,000 $2.25 = $33,750
Net Income = $11,250
Thus, the net income will increase by $11,250