Answer:
P₀ = $59.45
Explanation:
the numbers are missing so I looked for a similar question:
- expected EPS = $2.775
- retain 0% of earnings (years 1 - 2)
- retain 48% of earnings (years 3 - 4)
- then retain 23%
- expected return on new projects = 22.4%
- Re = 10.7%
growth rate = retention rate x return on new projects
g₁ = not given EPS₁ = $2.775
g₂ = 1 x 22.4% = 22.4% EPS₂ = $3.3966
g₃ = 1 x 22.4% = 22.4% EPS₃ = $4.1574
g₄ = 0.48 x 22.4% = 10.752% EPS₄ = $4.6044
g₅ = 0.48 x 22.4% = 10.752% EPS₅ = $5.0995
g₆ = 0.23 x 22.4% = 5.152% EPS₆ = $5.3622
dividend payout ratio expected dividend
year 1 = 0 $0
year 2 = 0 $0
year 3 = 0.52 $2.1618
year 4 = 0.52 $2.3943
year 5 = 0.77 $3.9266
year 6 = 0.77 $4.1289
since the growth rate became constant at year 6, we can find the terminal value for year 5:
terminal value year 5 = $4.1289 / (10.7 - 5.152%) = $74.4214
P₀ = $0/1.07 + $0/1.07² + $2.1618/1.07³ + $2.3943/1.07⁴ + $3.9266/1.07⁵ + $74.4214/1.07⁵ = $0 + $0 + $1.7647 + $1.8266 + $2.7996 + $53.0614 = $59.45
Answer:
The adjustment balance will be of 18,000
Explanation:
We should build Accounts Receivables T-account to get the adjusted balance:
Accounts Receivables
<u>DEBIT CREDIT</u>
15,000 UNADJUSTMENT
<u> 3,000 ADJUSTMENT</u>
18,000 ADJUSTED BALANCE**
**As the adjustment is in the same side as the unadjusted balance, we add it. So we end up with 15,000 + 3,000 = 18,000
Answer:
The truth about Macaulay Duration and Modified Duration is:
d. All are true.
Explanation:
Principally, the Macaulay Duration, used mainly with immunization strategies, measures the weighted average time an investor holds a bond until the period when the present value of the bond’s cash flows equals to the initial bond amount.
On the other hand, the Modified Duration, providing a risk measure by being sensitive to interest rates, identifies the amount by which the duration changes for each percentage change in the yield and, at the same time, measures how the amount of a change in the interest rates impacts a bond's price.
Answer:
The amount of Best Buy's cost of goods sold was $32,720 million
Explanation:
cost of goods sold = sales - gross profit
= $42,410 million - $9,690 million
= $32,720 million
Therefore, The amount of Best Buy's cost of goods sold was $32,720 million
