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lora16 [44]
3 years ago
10

Lifecycle Motorcycle Company is expected to pay a dividend in year 1 of $2, a dividend in year 2 of $3, and a dividend in year 3

of $4. After year 3, dividends are expected to grow at the rate of 7% per year. An appropriate required return for the stock is 12%. Using the multistage DDM, the stock should be worth __________ today.
Business
1 answer:
Bezzdna [24]3 years ago
7 0

Answer:

$67.95

Explanation:

Dividends per year;

D1 =$2

D2 = $3

D3 = $4

D4 = D3(1+g)

g= growth rate = 7% or 0.07 as a decimal

D4 = 4*(1.07) = $4.28

Next, find PV of each dividend at 12% rate of return and sum them up;

Price= 2/ (1.12) + 3/(1.12^2) +4/ (1.12^3) + \frac{4.28/(0.12-0.07)}{1.12^{3} }

=1.7857 + 2.3916 + 2.8471 + 60.9284

= 67.9528

Therefore, the stock should be worth $67.95 today

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xxMikexx [17]
<span>Utility gained with each individual unit of a good that you purchase is called </span>a. marginal utility

This is of high importance because marginal utilities are used to determine how many items a consumer is willing to buy.
6 0
3 years ago
X Company has two production departments, A and B. The following is budgeted information for all of its products in 2019, and ac
Zina [86]

Answer:

Explanation:

Overhead allocated to Product X = Department A overhead cost+ Department B overhead cost

=  $51,157.84+$5755.62=

= $56,913

Calculations:

Using a single-driver allocation system, with direct labor hours as the driver, how much overhead was allocated to Product X:

Department A's Overhead rate per labor hour = Overhead costs/Total direct labor hours  = $4300000/60000 hours = $71.66 per hour

Overhead (Department A) = $71.66per hour*724 labor hours

= $51,157.84

Department B's Overhead rate per labor hour = Overhead costs/Total direct labor hours  = $2200000/60000 hours = $36.66 per hour

Overhead (Department A) = $36.66 per hour*157 labor hours

= $5755.62

6 0
3 years ago
An apparel manufacturing plant has estimated the variable cost to be $3.30 per unit. Fixed costs are $1,800,000 per year. Forty
erica [24]

Answer:

$15.30

Explanation:

Given that,

Fixed costs = $1,800,000 per year

Variable cost = $3.30 per unit

40% of its business is with one preferred customer.

Total units sold in a year = 150,000

Unit cost per item:

= (Fixed cost ÷ Total units sold) + Variable cost per unit

= ($1,800,000 ÷ 150,000) + $3.30

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4 0
3 years ago
Practice Question 25 Which one of the following is an effective method of evaluating a cost center? Compare actual total costs w
Afina-wow [57]

Answer:

C). Compare actual controllable costs with flexible budget data.

Explanation:

The Cost center is very crucial to be determined by an organization as it indirectly bestows its profitability. It is usually calculated by comparing the actual cost generated by the department to the expectations as per the budgeted cost. Thus, the most constructive method to evaluate a cost center would be the 'comparison between the actual controllable costs and the flexible budget data' as it helps in assessing the actual expense incurred during the year and whether it is lesser or greater than the cost estimated in the budget. Hence, <u>option C</u> is the correct answer.

6 0
3 years ago
Read 2 more answers
We've talked a lot about "fixed" and "variable" expenses. We've talked about the way these expenses impact your budget and your
eimsori [14]

Answer:c

Explanation:

6 0
3 years ago
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