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Tomtit [17]
4 years ago
15

Stormy Weather has no attractive investment opportunities. Its return on equity equals the discount rate, which is 10%. Its expe

cted earnings this year are $4 per share. Find the stock price, P/E ratio, and growth rate of dividends for plowback ratios of (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter the growth rate as a whole percent.):
Business
1 answer:
Temka [501]4 years ago
7 0

Answer:

Assume that the Plow back Ratio is 50

Now,

To Compute the growth rate;

Growth rate = Return on equity × Plow back ratio

Growth rate = 10% × 0.50

Growth rate = 5.0%

Computation of the stock price.

Stock price = Dividend pa share / (Required rate - Growth rate)

Stock price = Earnings pa share × (1 - Plow back ratio) / (Required rate -Growth rate)

Stock price = $4 × (1 - 0.50) / (10% - 5.00%)

Stock price = $2.00 / 5.00%

Stock price = $40

Computation of the P/E ratio.

PIE ratio = Stock price / Earnings pa share

PIE ratio = $40 / $4

PIE ratio = $10

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Company expects to sell 500 units during the second quarter and 550 units in the third quarter. Currently, during the second qua
FinnZ [79.3K]

Answer:

509 units

Explanation:

The expected sales in the present quarter is 500 units (for second quarter) and we have 46 units on hand.

We want a reserve of 10% during the next quarter.

The expected sales in next quarter is 550 units so reserve of 10% is

Reserve = 0.10 * 550= 55 units

Balance to produce this quarter= 500 - 46= 454 units

Total to produce= Balance produced + Reserve

Total to produce= 454 + 55= 509 units

7 0
3 years ago
1. You are 26 years old, married, and have two small children. You have a household income (take-home pay) of $3,500 per month a
kramer

Answer:

1. A) Satisfying your day-to-day spending needs?

<u>Statement Savings account </u>

Bank statements will hep you keep track of the balance.

B) Making and holding funds for your car purchase?

<u>NOW Account.</u>

An account that earns interest yet allows the owner to write drafts against the money in the account. This would be good here as it will increase the funds you are saving for the car purchase.

C) Making and holding funds for your home purchase?

<u>NOW Account. </u>

NOW stands for Negotiable Order of Withdrawal account and would work here as well.

D) Making and holding funds for your retirement?

<u>Certificate of Deposit.</u>

These are offered by banks and earn a higher interest return. They however have to be locked up for a while without withdrawing so they are great for retirement saving.

2. Which of the following accounts is typically not insured?

<h2>A. Mutual Funds.</h2>

Mutual funds are not financial deposits so will not be covered by the Federal Deposit Insurance Corporation (FDIC).

3. Which of the following practices would help you keep accurate records regarding the funds in your bank account?

  • A. Keep track of your balance online.
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4. You can avoid a service fee on an average-balance account if you:

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6 0
3 years ago
What are the advancements made in the automotive industry in 2020
Nata [24]

Answer:

Autonomous Vehicles (AV)

Connectivity

Electrification

Shared Mobility

Artificial Intelligence (AI)

Big Data & Data Analytics

Human-Machine Interface

Blockchain

Explanation:

6 0
3 years ago
Read 2 more answers
Suppose Powers Ltd., just issued a dividend of $1.20 per share on it common stock. The company paid dividends of $.85, $.92, $.9
tino4ka555 [31]

Answer: 11.48%; 11.47%

Explanation:

Given that,

Dividend Issued on common stock = $1.20 per share

Dividend paid in last four years:

$.85 per share

$.92 per share

$.99 per share

$1.09 per share

Stock currently sells at = $53

Calculation of growth rates in dividends :

G1 = \frac{0.92-0.85}{0.85}

    = 8.24%

G2 = \frac{0.99-0.92}{0.92}

     = 7.6%

G3 = \frac{1.09-0.99}{0.99}

     = 10.1%

G4 = \frac{1.20-1.09}{1.09}

     = 10.09%

(1) Arithmetic growth Rate = \frac{8.24+7.6+10.1+10.09}{4}

                                           = 9.01%

Cost of Equity = \frac{(1.20)(1.0901)}{53}+0.0901

                        = 11.48%

(2) Geometric growth Rate

1.20=0.85(1+g)^{4}

G = 9%

Cost of Equity = \frac{(1.20)(1.09)}{53}+0.09

                        = 11.47%

5 0
3 years ago
We have an intuitive appreciation for those who are able to earn a profit. We can see that resources flow to those who successfu
mr_godi [17]
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8 0
3 years ago
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