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eduard
3 years ago
9

You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend at 4.1 percent indefinitely

. The company just paid a dividend of $3.20 and you feel that the required return on the stock is 10.3 percent. What is the price per share of the company's stock?
Business
1 answer:
grigory [225]3 years ago
7 0

Answer:

Price of stock = $53.73

Explanation:

<em>The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.  </em>

The model is given as  

P = D×(1+g)/(r-g)  

P- price, D- dividend payable now , r -cost of equity, g - growth rate in dividend

DATA:

P= ?

D- 3.20

g- 4.1%

r-10.3%

Price of stock = 3.20× 1.041/(0.103-0.041) = 53.73

Price of stock = $53.73

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If the Central Bank of Macroland puts an additional 1,000 dollars of currency into the economy, the public deposits all currency
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Answer:

a. 9,000; 10,000

Explanation:

The computation is shown below:

The money multiplier is

= 1 ÷ 0.10

= 10

Now If $1,000 are deposited in banks and the expected reserve ratio is 0.10 ration so the lending amount is $900.

And now if we considered the money multiplier, so it would be increased by

= $900 × $10

= $9,000

And, the increase in money supply is

= $9,000 + $1,000

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Hence, the correct option is a.

4 0
3 years ago
Merle Industries had been selling its product for $24 per unit, but recently lowered the selling price to $17 per unit. The comp
Lana71 [14]

Answer:

The company’s inventory be reported on the balance sheet as $3,150.

Explanation:

GAAP and IFRS requires that the inventory of the company should be recorded as Lower cost and Net realizable value of the inventory.

According to given data

Available Inventory = 210 units

Cost of Inventory = 210 units x $20 = $4,200

Net realizable value is the value of the inventory which can be recovered on the immediate sale. the current market value of the inventory is $15.

So,

Net realizable value is = 2,100 units x $15 = $3,150

As the Net realizable value is lower than the cost of the inventory, $3,150 should be reported as inventory on the balance sheet.

7 0
3 years ago
5. Successive US administrations have accused the Chinese government of manipulating their currency (Yuan) to
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A weaker Yuan against the US dollar makes Chinese exports cheaper, increases demand, and makes US exports to China more expensive, thereby reducing the demand for US exports.

<h3>What is international trade?</h3>

International trade is the global exchange of goods and services among countries of the world, involving the use of the foreign exchange.

The three types of international trade are:

  • Export Trade
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  • Entrepot Trade.

Thus, by manipulating the Yuan, the Chinese government ensures that it has a more competitive advantage over the United States in international trade.

Learn more about Chinese Yuan Manipulation at brainly.com/question/27858412

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2 years ago
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3 years ago
Preston Corp. is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percen
Alchen [17]

Answer:

Follows are the solution to this question:

Explanation:

\text{Equity expense = free risk rate+beta} \times \text{market risk premium}

                        =3 \% + 1.2 \times 5 \% \\\\= 0.03  + 1.2 \times 0.05  \\\\= 0.03  +0.06  \\\\= 0.09\\\\=9 \%

\text{Preferred inventory cost}  = \frac{\text{annual dividend}}{( price - floation \ rate)}

                                     = \frac{(100 \times  5.46 \%)}{(100-100 \times  5 \%)}\\\\=5.75 \%

\text{Excel feature = RATE(nper, PMT, PV, FV)}

                     =(RATE( \frac{20 \times  2,1000 \times  12 \%}{2,-1100,1000})) \times 2 \\\\=10.77 \%

\text{Debt expense after tax}= 10.77 \%  \times  (1-40 \%)

WACC from Preston   = Capital weight \times  Capital equity costs+cost of common stock \times cost of common shares \times debt cost \times (1-tax rate)

=60 \% \times  9 \%+20 \% \times 5.75 \%+20 \% \times 6.46 \% \\\\=7.84 \%

5 0
3 years ago
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