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Maksim231197 [3]
2 years ago
9

Driver Products recently paid its annual dividend of $2, and reported an ROE of 15%. The firm pays out 50% of its earnings as di

vidends. The stock has a beta of 1.44. The current risk-free rate is 2.5% and the market return is 11%. Assuming that CAPM holds, what is the intrinsic value of this stock?
Business
1 answer:
iragen [17]2 years ago
5 0

Answer:

$29.70

Explanation:

Retention ratio = 1 - payout ratio

= ( 1  -0.5 )

= 0.5

Growth rate, g = ROE × Retention ratio

= 0.15 × 0.5

= 0.075

= 7.5%  

Required return = Risk - free rate + [ Beta × (Market rate- risk-free rate) ]

= 2.5% + 1.44 × (11% - 2.5%)

= 14.74%

Intrinsic value = \frac{\textup{D1}}{\textup{(Required return-Growth rate)
}}

=\frac{\textup{2}\times(1+0.075)}{\textup{(0.1474-0.075)
}}

= 29.69 ≈ $29.70

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The use of the <u>internet  </u>allows bank customers the ability to complete most transactions electronically without leaving home.

<h3>What is Internet?</h3>

Internet help to transmit data or information across a network, making it possible for internet user to communicate and exchange information.

Example of internet are:

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1 year ago
Tony has been sent to sales training and the final examination requires delivering an effective sales presentation. If he passes
vazorg [7]

Answer: interactional

Explanation:

Based on the information given, the trainer’s failure to discuss these aspects of Tony’s presentation performance demonstrated a lack of attention to the interactional justice.

Interactional Justice involves the communication of the procedures that are used in judging the performance of a person. It focuses on the treatment that individuals get when there are implementation of certain procedures. This standard is utilized by the employees at work.

In this scenario, the trainer failed to interact with Tony as he didn't explain his flaws to him and didn't tell him the reason that he wasn't chosen. Thereby, the trainer didn't pay attention to interactional fairness.

8 0
2 years ago
Owens Corporation uses a process costing system. For March, the beginning work in process inventory consisted of 60,000 units th
Black_prince [1.1K]

Answer:

C) $4.02

Explanation:

The computation of cost per equivalent unit for processing cost for March is shown below:-

As we know that

Beginning work in process inventory units + Units started into production  = Ending work in process inventory units + Units completed and transferred out

60,000 + 190,000 = Units in ending work in process inventory + 200,000

Units in ending work in process inventory is

= 60,000 + 190,000 - 200,000

= 50,000

To complete the beginning work in process inventory:-      

Processing:                                                     24,000

60,000 units ×(100% - 60%) a

Units started and completed                          140,000

(200,000 − 60,000) b

Ending work in process inventory Processing:

50,000 units × 20% c                                      10,000

Equivalent units of production                        174,000

Cost added throughout the period e            7,00,000

Equivalent units of production f                     174,000

Cost per equivalent unit e ÷ f                             $4.02

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3 years ago
Mistine is a direct selling cosmetics firm based in Thailand. Originally, it made a name for itself selling an affordable produc
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I’m fighting this out for you
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2 years ago
Retail Division $155,800 $550,000 Commercial Division 134,000 330,000 Internet Division 146,400 540,000 Assume that management h
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The Residual Income for each division:

Retail Division = $4,95,000

Commercial Division = $2,97,000

Internet Division = $4,86,000

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A. Operating Income   $155,800                 $134,000                  $146,400

B. Minimum acceptable operating income as a % of invested assets:

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Invested assets            $550,000                $330,000         $540,000

(Invested assets x 10%) =  <u>$55,000                 $33,000           $54,000</u>            

C = A - B Residual Income =<u>$4,95,000       $2,97,000       $4,86,000 </u>

<u />

<h3>What is Residual Income?</h3>

Residual Income refers to a calculation that provides the amount of money leftover that a company or individual has after all expenses have been paid. The amount of money that is left over after all expenses are covered is typically referred to as residual income, profit, net income, or earnings.

One specific type of meaning for residual income is similar to the terms passive income or residual pay—in that it can represent income earned on a continual basis, not tied to specific amounts of time, and not requiring active work to generate.

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7 0
1 year ago
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