Answer and Explanation:
The computation is shown below:
a. The current stock price is
As we know that
Current stock price = (Dividend) ÷ (Required rate of return - growth rate)
= ($8) ÷ ( 10% - 5%)
= $160
b. Now the value of the ROE on the firm’s investment opportunities is
Given that
Dividend = $8
And,
The payout ratio = Dividend ÷ Earning per share
= $8 ÷ $12
= 0.666666666666667
And, retention ratio (b) is
= 1- 0.666666666666667
= 0.333333333333333
In addition to it
indefinite growth rate (g) = 5%
So, the ROE is
= Growth rate ÷ retention ratio
= 0.15 ÷ 0.3333
= 15%
c. And, the market paying per share is
PVGO = Price - Earning per share ÷ required rate of return
where,
PVGO = Present Value of Growth Opportunity
So, the market paying per share is
= $160 - $12 ÷ 10%
= $160 - $120
= $40
Answer: A. store across town
Explanation:
This is a question about opportunity cost. How much is it really costing Juanita to leave work to buy a dress. Let's calculate.
KEY ASSUMPTIONS
She makes $30 per hour.
She takes 30 minutes to shop.
She takes the same time going to the place as the same time coming.
LOCAL DEPARTMENT STORE.
It will take her 15 minutes to get here and 15 back. She will shop for 30 minutes.
Adding all that will be 15+15+30 = 60 mins or 1 hour so she will lose 1 hour in wages if she buys at the local store meaning the total price is her hourly wages + the cost of the dress.
30 + 114 = $144
ACROSS TOWN
It will take her 30 minutes to get here and 30 back. She will shop for 30 minutes.
Adding all that will be 30+30+30 = 90 mins or 1 hour 30 minutes so she will lose 1 hour and 30 minutes in wages if she buys at the store across town meaning the total price is her hourly wages + the cost of the dress.
If 1 hour is $30 dollars then 30 minutes is half of that being $15.
30 +15 + 86 = $131
NEIGHBORING CITY
It will take her 60 minutes to get here and 60 back. She will shop for 30 minutes.
Adding all that will be 60+60+30 = 150 mins or 2 hours 30 minutes so she will lose 2 hours and 30 minutes in wages if she buys at the store in another city meaning the total price is her hourly wages + the cost of the dress.
If 1 hour is $30 dollars then 30 minutes is half of that being $15.
30 + 30 + 15 + 60 = $135
The STORE ACROSS TOWN will cost her the lowest at $131
Answer:
$240,000
Explanation:
The computation of the gain to be recognized is shown below:
= Total Exchange value - net value
where,
Total exchange value equals to
= Fair value of equipment + cash received
= $480,000 + $120,000
=$600,000
And, the net value would be
= Estimated cost - accumulated depreciation
= $660,000 - $300,000
= $360,000
ow put these values to the above formula
So, the value would be equal to
= $600,000 - $360,000
= $240,000
Answer:
C. the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected.
Explanation:
If the actual direct material cost used is greater than the standard direct material cost, it implies that the cost of material that was actually used in carrying the project is greater than the usual standards for such project or the budgeted standards for such project. When the actual cost is greater than the standard cost, we have an unfavorable variance. When the actual cost is greater than standard cost, it usually implies that the price of unit per raw material used is greater or/and the actual quantities of raw material used is greater.