Which of the following is TRUE regarding a dead weight loss.

A company currently pays a dividend of $2.8 per share (D0 = $2.8). It is estimated that the company's dividend will grow at a ra

Vinil7 [7]

Answer:

Intrinsic value: 53.41 dollars

Explanation:

First, we use the CAPM model to know the value of the stock

$Ke= r_f + \beta (r_m-r_f)$

risk free 0.085

premium market =(market rate - risk free) = 0.045

beta(non diversifiable risk) 1.3

$Ke= 0.085 + 1.3 (0.045)$

Ke 0.14350

Now we need to know the present value of the future dividends:

D0 = 2.8

D1 = D0 x (1+g) = 2.8 * 1.23 = 3.444

D2 3.444 x 1.23 = 4.2361200

The next dividends, which are at perpetuity will we solve using the dividned grow model:

$\frac{divends}{return-growth} = Intrinsic \: Value$

In this case dividends will be:

4.23612 x 1.07 = 4.5326484

return will be how return given by CAPM and g = 7%

plug this into the Dividend grow model.

$\frac{4.5326484}{0.1435 - 0.07} = Intrinsic \: Value$

value of the dividends at perpetity: 61.6686857

FInally is important to note this values are calculate in their current year. We must bring them to present day using the present value of a lump sum:

$\frac{Principal}{(1 + rate)^{time} } = PV$

$\frac{3.444}{(1 + 0.1435)^{1} } = PV$

3.011805859

$\frac{4.23612}{(1 + 0.1435)^{2} } = PV$

3.239633762

$\frac{61.6686857}{(1 + 0.1435)^{2}} = PV$

47.16201531

We add them and get the value of the stock:

53.413455

5 0

3 years ago

Suki health foods has 19,000 shares of $5 par common stock outstanding, which were issued at $12 per share. suki also has a defi

Y_Kistochka [10]

We can calculate for the total stockholders’ equity by using the formula:

Total stockholders’ equity = Number of Shares * Price per Share – Deficit Balance

Substituting our given values:

Total stockholders’ equity = 19,000 shares * ($12 / share) - $75,000

Total stockholders’ equity = $153,000

5 0

3 years ago

Exercise 5-66 Bad Debt Expense: Percentage of Credit Sales Method Gilmore Electronics had the following data for a recent year:

Stels [109]

Answer: Debit Bad debt expense $11,264, Credit Allowance for bad debt $11,264; Debit Allowance for bad debt $9,650, Credit Accounts receivable $9,650.

Explanation: Percentage of credit sales method means bad debt expense expressed as a percentage of sales.

The estimated bad debts rate is 2.2%, which translates to 2.2% of $512,000 (credit sales) = $11,264. The firm has to record this, being the estimated bad debts rate, as Debit to bad debt expense and Credit to allowance for bad debt. However, accounts receivable that was deemed uncollectible is $9,650. This amount would be taken out from the buffer in allowance account by debiting allowance for bad debt and crediting accounts receivable.

5 0

3 years ago

as a rule of thumb, when renting an apartment your monthly rent should not be more than the amount you earn in ___ a. one week b

pav-90 [236]

Answer:

1 week

Explanation:

7 0

3 years ago

Read 2 more answers

Type your summary here. Use the Internet to find an article that presents a forecast of the economy's performance in the next th

larisa [96]

Explanation:

an entrepreneur is always creative have ideas make best decision thinks before decision

7 0

3 years ago