Answer:
1. C
2. B. 13.65%.
Explanation:
1. Some of the portion of Earnings After Tax is given out to Shareholders in the form of Dividends and some of it is retained for growth Purposes. As the Retained Earnings are used for expansion and growth, that's why the formula for Growth is (ROE)*(Retention Ratio). When companies pay out large amount of dividends, it is left with minimal amount for retention which affects its growth rate and the rate tends to decrease.
If you look at the model of Constant Growth, also given in the question, the Growth Rate is deducted in Denominator. A lower growth rate will increase the denominator value and hence the stock price will go down.
2. Rearrange the formula for Constant Growth:
P0 = D1 / (Ke - g) OR Ke = (D1/P0) + g
⇒ Ke = (.85/20.5) + .095 = .1365 OR 13.65%.
Answer:
CVP Income Statement
Sales revenue 2,350,000
Less: Total variable cost <u>1,110,000</u>
Contribution margin 1,240,000
Less: Fixed cost <u>663,000</u>
Net Operating income <u>$577,000</u>
Note:
Cost of goods sold 940000
Selling expenses 74000
Admin expense <u>96000 </u>
Total variable cost <u>1110000</u>
Cost of goods sold 464000
Selling expenses 54000
Admin expense <u>145000</u>
Total Fixed cost <u>663000</u>
Answer:
$1,935.90
Explanation:
We prepare a Bank Reconciliation Statement to determine the reconciled balance as follows :
<u>Erin Garnder</u>
<u>Bank Reconciliation Statement</u>
Balance as per Bank Statement $2,087.93
Add Outstanding Lodgments $813.11
Less Unpresented checks
($224.15 + $327.80 + $88.10 + $122.42 + $202.67) ($965.14)
Balance as per Cash Book $1,935.90
Therefore,
The reconciled balance is: $1,935.90
Answer:
$22.81
Explanation:
We can easily calculate share price for BeeGood company just by multiplying the current earnings per share with an average P/E ration of competitors
P/E = Price earning ratio
EPS = Earning per share
Formula: Share price = PE x EPS
Share price = x $1.74
Share price = $22.81
Answer:
$11,883.35
Explanation:
The formula for calculating continuous compounding is given below
F=p*e^it
In this question:
F=future value of the amount borrowed today=?
p=amount borrowed today/Purchases made by chris through credit card=$6,925
e=mathematical constant=2.7183
i=interest per annum=18% per annum
t=number of years=3 in this case
F=6,925*e^18%*3
F=$11,883.35