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yanalaym [24]
3 years ago
15

When different invest Assume​ Evco, Inc. has a current stock price of $ 50.00 and will pay a $ 2.00 dividend in one​ year; its e

quity cost of capital is 15 %. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current​ price
Business
1 answer:
Yakvenalex [24]3 years ago
5 0

Answer:

The correct answer is $55.5.

Explanation:

According to the scenario, the given data are as follows:

Stock Price = $50

Dividend  = $2

Equity cost   = 15%

So, we can calculate the Price of the stock after 1 year by using following formula:

Stock Price = ( Dividend + Stock price after 1 year) ÷ ( 1 +  Equity cost)

By putting the value we get

$50 = ($2 + Stock price after 1 year) ÷ ( 1 + 0.15 )

Stock price after 1 year = [$50 × 1.15] - $2

= $55.5

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In the late 1930s management at Atalanta Industries agreed to hire only those workers who were already members of the Electrical
Alex73 [517]

Answer:

Closed shop

Explanation:

A closed shop involves an agreement where the employer only recruits Union members. The workers must remain Union members as long as they work with the employer.

Legality of closed shop varies from country to country.

I'm this instance, Atalanta Industries agrees to hire only those workers who were already members of the Electrical Union. This is a closed shop situation.

Closed shop was declared illegal by the Taft-Hartley act in 1947.

7 0
3 years ago
Read 2 more answers
Crystal Apple Sales Company began 2014 with cash of $2,000, inventory of $3,600 (200 crystal apples that cost $18 each), $2,500
Andru [333]

Answer and Explanation:

a. The computation of ending inventory and cost of goods sold using the three different cost flow assumptions: FIFO, LIFO, and Weighted Average is shown below:-

Cost of goods sold = (200 × $18) + (800 × $20) + (1,040 × (2,040-200-800)

= (200 × $18) + (800 × $20) + (1,040 × $24)

= $3,600 + $16,000 + $24,960

= $44,560

Ending Inventory Under FIFO = (1,200 - 1,040) × (2,040-200-800)

= 160 × $24

= $3,840

Under LIFO method

Cost of goods sold is

= (1,200 × $24) + (800 × $20) + (40 × $18)

= $28,800 + $16,000 + $720

= $45,520

Ending Inventory Under LIFO is

= (200 - 40) × $18

= 160 × $18

= $2,880

Weighted Average cost flow Assumption

Weighted Average cost per apple = Cost of Beginning inventory and purchase ÷ Total apple available

Cost of Beginning inventory and purchases is

= (200 × $18) + (800 × $20) + (1,200 × $24)

= $3,600 + $16,000 + $28,800

= $48,400

Total apples available is

= 200 + 800 + 1,200

= 2,200  

Weighted Average cost per apple is

= $48,400 ÷ 2,200

= $22

Cost of goods sold is  

= 2,040 × $22

= $44,880

Ending Inventory is

= 160 × $22

= $3,520

b. The Preparation of income statement, a balance sheet, and a statement of cash flows under each of the three cost flow assumptions is prepared below:-

Income Statement                       Amount

Sales (2,040 × $40)                     $81,600

Less: Cost of goods sold            ($44,560)

Gross Profit                                  $37,040

Less: Operating Expenses         ($26,000)

Income before income taxes      $11,040

Less: Income tax (30% × $11,280) ($3,312)

Net Income                                     $7,728

Balance Sheet

Assets  

Cash                                                   $9,488

Inventory                                             $3,840

Total Assets                                        $13,328

Liabilities and Stockholder's Equity

Common Stock                                   $2,500

Retained Earnings                              $10,828

Total Liabilities and Equity                $13,328

Working note

cash = (opening + Sales - Purchases - Operating expenses - Income tax expenses )

= $2,000 + $81,600 - $44,800 - $26,000 - $3,312

= $9,488

Retained earning = (Opening + Net Income)

= $3,100 + $7,728

= $10,828

Statement of Cash Flow

Cash Flow from Operating Activities  

Cash Sales                                               $81,600

Payment to Accounts Payable              ($44,800)

Operating Expenses                              ($26,000)

Income tax paid                                      ($3,312)

Net Increase in cash and

cash equivalents                                     $7,488

Add: Opening Cash and

cash equivalents                                     $2,000

Closing Cash and cash equivalents      $9,488

LIFO cost flow Assumption

Income Statement

Sales (2,040 × $40)                                 $81,600

Less: Cost of goods sold                         ($45,520)

Gross Profit                                              $36,080

Less: Operating Expenses                     ($26,000)

Income before income taxes                  $10,080

Less: Income tax (30% × $10,080)             ($3,024)

Net Income                                               $7,056

Balance Sheet

Assets  

Cash                                                           $9,776

Inventory                                                    $2,880

Total Assets                                               $12,656

Liabilities and Stockholder's Equity

Common Stock                                           $2,500

Retained Earnings                                       $10,156

Total Liabilities and Equity                         $12,656

Working note:-

Cash = (opening + Sales - Purchases payment - Operating expenses -Income tax expenses)

= $2,000 + $81,600 - $44,800 - $26,000 - $3,024

= $9,776

Retained earning = (Opening + Net Income)

= $3,100 + $7,056

= $10,156

Statement of Cash Flows  

Cash Flow from Operating Activities  

Cash Sales                                             $81,600

Payment to Accounts Payable            ($44,800)

Operating Expenses                            ($26,000)

Income tax paid                                     ($3,024)

Net Increase in cash and

cash equivalents                                     $7,776

Add: Opening Cash and

cash equivalents                                     $2,000

Closing Cash and cash equivalents       $9,776

Weighted Average cost flow Assumption

Income Statement  

Sales (2,040 × $40)                                   $81,600

Less: Cost of goods sold                         ($44,880)

Gross Profit                                               $36,720

Less: Operating Expenses                       ($26,000)

Income before income taxes                   $10,720

Less: Income tax (30% × $10,720)           ($3,216)

Net Income                                                $7,504

Balance Sheet  

Assets  

Cash                                                           $9,584

Inventory                                                   $3,520

Total Assets                                              $13,104

Liabilities and Stockholder's Equity

Common Stock                                         $2,500

Retained Earnings                                     $10,604

Total Liabilities and Equity                       $13,104

Working note

Cash = opening + Sales - Purchases payment - Operating expenses - Income tax expenses )

= $2,000 + $81,600 - $44,800 - $26,000 - $3,126

= $9,584

Retained earning = (Opening + Net Income)

= $3,100 + $7,504

= $10,604

Statement of Cash Flows

Cash Flow from Operating Activities

Cash Sales                                       $81,600

Payment to Accounts Payable      ($44,800)

Operating Expenses                       ($26,000)

Income tax paid                               ($3,216)

Net Increase in cash and

cash equivalents                              $7,584

Add: Opening Cash and

cash equivalents                            $2,000

Closing Cash and

cash equivalents                               $9,584

8 0
2 years ago
Which of the following statements is true? Total revenue will equal zero when the demand for a product is unit elastic. When a f
Gre4nikov [31]

Answer:

Total revenue will equal zero when the demand for a product is unit elastic. FALSE

When a firm lowers its price its total revenue may either increase or decrease. TRUE

Whenever a firm raises its price its total revenue will increase.  FALSE

Whenever a firm increases its quantity sold its revenue will increase. FALSE

Explanation:

Price elasticity en the demand measures the porcentage of change in the quantity demandend when a price is changed.

When the porcentage of change in the quantity demanded is the same of the porcentage of change in the price we talk of unit elastic. The revenues will keep being the same no matter the change in the price.

When a firm lower the price of a good it can increase the revenues if the product has an elastic demand, it means that the porcentage of change in the quantity demanded is bigger than the porcentage in the change of the price, and if the product has an inelastic demand, the revenues will decrease. Price demand is inelastic when the porcentage of change in the quantity demanded is smaller than the porcentage in the change of the price.

7 0
2 years ago
California Surf Clothing Company issues 1,000 shares of $1 par value common stock at $20 per share. Later in the year, the compa
agasfer [191]

Answer:

Dr. Cash                                           $2,500

Cr. Treasury Shares                        $2,300

Cr. Paid-In-Capital Treasury Stock $200

Explanation:

Treasury stock is the share of the company issued earlier and bought-back. It can be reissued and cancelled by the company.

At the time of repurchase

Treasury Shares = 100 x $23 = $2,300

Dr. Treasury Stock $2,300

Cr. Cash                  $2,300

At the time of Resale

All the difference in the issuance of treasury stock will be transferred to Paid-In-Capital Treasury Stock account.

Proceeds = 100 x $25 = $93,600

Paid-In-Capital Treasury Stock = $2,500 - $2,300 = $200

6 0
3 years ago
Accredited investors are_______a.investors with incomes of no less than $5,000 in each of the last two years.b.investors whose n
kodGreya [7K]

Answer:

d

Explanation:

Accredited Investors are people or companies able to deal with unregistered companies before financial authorities. According to FCC regulations, in case of people, They must be general partners of the issuing companies, like executive officers.  In addition to this, since accredited investors must have earned $200,00 for the past two years and own a $1,000,000 net worth then the answer it's d.

8 0
2 years ago
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