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Nostrana [21]
3 years ago
11

Determine the required rate of return for Johnson and Johnson​, assuming the geometric growth rate was 13.04​% for the period​ 2

001-2010, its trading price on January​ 14, 2011 was ​$62.55​, and the dividend for 2010 was ​$2.110.
Business
2 answers:
Inessa05 [86]3 years ago
7 0

Answer:

13.08%

Explanation:

Use the dividend model to calculate Required return

given P=$62.55

         g=13.04%

          D0=2.110

           r=?

The formula P=D1/r-g

 First calculate D1 =2.110×1.1304

                               =2.385

substitute in the formula and solve for r

62.55 = 2.385/r-13.04

Cross multiply we get

62.55r-815.652 = 2.385

62.55r=818.037

62.55r/62.55=818.037/62.55

r=13.078/13.08%

Aleks04 [339]3 years ago
5 0

Answer:

The required rate of return for Johnson and Johnson is 16.85%

Explanation:

Johnson and Johnson paid an annual dividend of $2.110 last year, the geometric growth rate was 13.04​ percent during last ten years.

To find out the expected dividend to be paid be Johnson and Johnson this year.

= [$2.110(1.1304)]

= $2.385

Required Rate of Return is calculated by the following formula,

R = \frac{expected dividend}{current share price} + growth rate for dividend

R = 2.385/62.55 + 0.1304

R = .1685, or 16.85%

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xz_007 [3.2K]

The total amount of quick assets is equal to $119,232. therefore, Option B is the correct statement.

<h3>What are Quick Assets?</h3>

Quick assets encompass cash available or current assets like accounts receivable that may be transformed to cash with minimum or no discounting.

Companies have a tendency to use the short assets to cover short-time period liabilities as they arrive up, so speedy conversion into cash (excessive liquidity) is critical.

Inventories and prepaid expenses aren't quick assets due to the fact they may be hard to transform into cash, and deep discounts are sometimes needed to do so.

The amount of quick assets is equal to Accounts receivable plus Cash plus Marketable securities.

Quick assets = $67,719 + $20,980 + $30,533

Quick assets = $119,232

Hence, the total amount of quick assets is equal to $119,232. Option B is the correct statement.

learn more about quick assets:

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2 years ago
Prebankruptcy counseling includes all of the following except:
Anon25 [30]
My answer would probably be B!
7 0
3 years ago
Frieda is itemizing deductions on her federal income tax return and had $1700 in non-reimbursed work expenses last year. If her
zhenek [66]

Answer:

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Explanation:

7 0
3 years ago
If the expected path of 1-year interest rates over the next five years is 2 percent, 4 percent, 1 percent, 4 percent, and 3 perc
timofeeve [1]

Answer:A) one year

Explanation: The unbiased expectations theory, also known as the expectation theory aims to estimate how much the short term interest rates will amount to in future. This is based on long term interest rates. Forward rates are used to predict the value of interests in the future based on the values calculated today. A maturity of 1 year has the lowest interest rate because it is not given enough time to grow. Interest rates tend to grow better over a longer period of time. Therefore in terms of expectation theory the longer the maturity the better the chances of interest rate growth.

6 0
3 years ago
Newsome Inc. buys on terms of 3/15, net 45. It does not take the discount, and it generally pays after 60 days. What is the nomi
gogolik [260]

Answer:

16.22%

Explanation:

3/15, net 45 means that if Newsome pays within 15 days, it will get discount of 3%, otherwise it can pay within 45 days in full.

Nominal annual percentage cost of  non-free trade credit based on 365 days can be calculated using the below formula:

Discount %/(100%-Discount %)*(365/(Actual credit days – Discount days))

In this case

Discount%=2%

Actual credit days=60

Discount period=15

Cost of non- free credit=2%/(100%-2%)*(365/(60-15)

                                       =2%/98%*(365/45)

                                       =0.02*8.11

                                       =16.22%

5 0
3 years ago
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