1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
ohaa [14]
3 years ago
13

Justin Cement Company has had the following pattern of earnings per share over the last five years: Year Earnings Per Share 20X1

$ 8.00 20X2 8.40 20X3 8.82 20X4 9.26 20X5 9.72 The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings. a. Project earnings and dividends for the next year (20X6). (Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answers to 2 decimal places.)b. If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (P0) at the beginning of 20X6? (Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answer to 2 decimal places.)
Business
1 answer:
ElenaW [278]3 years ago
8 0

Answer:

(a) $4.08

(b) $51.03

Explanation:

Constant growth rate for earnings:

= (EPS for any year ÷ EPS for the previous year) - 1

= (8.40 ÷ 8.00) - 1

= 0.05

= 5%

(a) EPS for 2016 = EPS for 2015 × (1 + 5%)

                          = 9.72 × 1.05

                          = $10.21          

Dividend for 2016 = 40% × EPS for 2016

                               = 40% × 10.206

                               = $4.08

(b) Stock Price at the beginning of 2016:

= Dividend for 2016 ÷ (Required rate of return - Constant growth rate)

= 4.0824 ÷ (0.13 - 0.05)

= $51.03

You might be interested in
Derick wants to purchase an existing business in the service industry. However, he does not want to use the traditional sources
OleMash [197]
The correct answer is B because there are websites that list businesses for sale along with contact information for dealing.
3 0
3 years ago
Read 2 more answers
Assume that laws have been passed that require the federal government to run a balanced budget. During a recession, the governme
Gnom [1K]

Answer:

Expansionary fiscal policy; lead to a budget deficit

Explanation:

A balanced budget is when the income of the government equals government's spending

A recession is when the GDP of a country for two consecutive quarters is negative. It is a period of slowdown in economic activities.

If there is a recession, the government would want to increase money supply by conducting an expansionary fiscal policy but would be prevented from doing so because of the balanced budget rule as an expansionary fiscal policy would lead to a budget deficit.

A budget deficit is when government spending exceeds income

3 0
3 years ago
Viv entered into a contract with Rodin, an assassin, to kill her ex-husband. She pays him $50,000, but he does not perform the d
Klio2033 [76]
No he don't have to give it back
7 0
3 years ago
Read 2 more answers
the relationship between the strategic planning process and portfolio management in an organization ______
Verizon [17]

Answer:

Explained below:

Explanation:

The Strategic Planning process is a planning process performed by the top-level management, to decide where the organization is willing to reach in the coming day and Portfolio management is the act of building and maintaining an appropriate investment mix for given risk tolerance.

Portfolio management in an organization is closely associated with each other as when the organization requires to do investment, it necessity be done through the  Strategic Planning process which is performed by the top-level management to minimize the risk.

3 0
3 years ago
If a country were to place a limit on the number of cars that could be imported in a year, it would be an example of what kind o
gizmo_the_mogwai [7]
Subsidy imported. trade regulation
6 0
3 years ago
Other questions:
  • Sheffield Company buys merchandise on account from Cheyenne Corp.. The selling price of the goods is $850, and the cost of the g
    9·1 answer
  • determine if the data is biased or not, every fortieth student who enters the school is asked to name their favorite sport​
    11·1 answer
  • How can you know if it’s a good time to start your business A. If you feel excited about it B. There’s never a bad time to start
    7·1 answer
  • A ____________ organization is characterized by direct two-way lines of responsibility, authority, and communication running fro
    14·1 answer
  • When travelers are bumped from overbooked flights, they are frequently offered vouchers good for future travel. The dollar value
    6·1 answer
  • Bark Company is considering buying a machine for $240,000 with an estimated life of ten years and no salvage value. The straight
    13·1 answer
  • 3. 1.2 Explain how the looting of shops and malls will affect businesses in terms of the relationship between social responsibil
    10·2 answers
  • Bethany needs to borrow $8,000. She can borrow money at 6.9% simple interest for 3 yr or she can borrow at 6.5% with interest co
    13·1 answer
  • What is the surface area of the Ceral box?<br> Hight is 30 width is 20 side width is 5
    6·1 answer
  • Can a student provide a student ID to purchase alcohol
    6·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!