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schepotkina [342]
3 years ago
11

The common stock of Auto Deliveries sells for $27.21 a share. The stock is expected to pay $1.80 per share next month when the a

nnual dividend is distributed. Auto Deliveries has established a pattern of increasing its dividends by 4.6 percent annually and expects to continue doing so. What is the market rate of return on this stock?
Business
1 answer:
DanielleElmas [232]3 years ago
5 0

Answer:

Market rate of return on stock = 11.2152%

Explanation:

Details provided are

Market rate per share = $27.21

Dividend to be paid at year end = $1.80

Expected dividend growth rate = 4.6%

Expected return of market has to be calculated.

Using the dividend growth model we have,

Price\ of\ share\ = \frac{Dividend\ at\ year\ end}{Market\ return\ - Growth\ rate}

27.21 = \frac{1.80}{Rm - 4.6}

Market return - growth = \frac{1.8}{27.21} = 6.6152

Market return = 6.6152 + 4.6 = 11.2152%

Market rate of return on stock = 11.2152%

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Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%. A share of stock sells fo
Tju [1.3M]

Answer: Price of stock at year end =$53

Explanation:

we first compute the Expected rate of return using the CAPM FORMULAE that

Expected return =risk-free rate + Beta ( Market return - risk free rate)

Expected return=6% + 1.2 ( 16%-6%)

Expected return= 0.06 + 1.2 (10%)

Expected return=0.06+ 0.12

Expected return=0.18

Using the formulae Po= D1 / R-g  to find the growth rate

Where Po= current price of stock at $50

D1= Dividend at $6 at end of year

R = Expected return = 0.18

50= 6/ 0.18-g

50(0.18-g) =6

9-50g=6

50g=9-6

g= 3/50

g=0.06 = 6%

Now that we have gotten the growth rate and expected return, we can now determine the price the investors are expected to sell the stock at the end of year.

Price of stock = D( 1-g) / R-g

= 6( 1+0.06)/ 0.18 -0.06

=6+0.36/0.12

=6.36/0.12=  $53

3 0
3 years ago
Carolyn owns a small business that designs air conditioning units for large buildings. A construction company that's building an
guajiro [1.7K]

Carolyn should contact them and offer her services on the job, furthermore she should set a meeting to discuss the specifics of the project.

8 0
3 years ago
Read 2 more answers
Roanoke Company produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The
Dafna1 [17]

Answer:

Roanoke Company

The standard direct materials cost per bar of chocolate is:

= $0.33.

Explanation:

a) Data and Calculations:

A batch of chocolate = 1,827 bars

Standard Costs for a batch:

Ingredient   Quantity      Price

Cocoa          600 lbs.    $0.40 per lb.

Sugar            180 lbs.    $0.60 per lb.

Milk              150 gal.      $1.70 per gal.

Ingredient   Quantity      Price                 Total Cost

Cocoa          600 lbs.    $0.40 per lb.      $240.00 (600 * $0.40)

Sugar            180 lbs.    $0.60 per lb.         108.00 (180 * $0.60)

Milk              150 gal.      $1.70 per gal.     255.00 (150 * $1.70)

Total cost of batch of chocolate =         $603.00

Cost per bar = $0.33 ($603.00/1,827)

5 0
3 years ago
Upper management of a clothing store in the mall has decided that a good way to motivate employees is to consult with them about
sergey [27]

Answer:

Consider the following analysis.

Explanation:

The manager's assumption is that the employee work only for their own benefits and they need immediate punishment for poor work, intermediation, and minute-level supervision. This proves that he uses Theory X.

The upper management, on the other hand, is trying to initiate consultation with the employees before bringing out any improvement plan in the business process. This type of management style implicitly assumes that the employees are motivated and self-directed. This is Theory Y.

So, the first option should be correct.

Equity theory is something not contextual here. Equity theory works on the reduction of perceived inequality in the input and output of the employees as a means of motivation.

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3 years ago
What quality-related trade-offs might there be between having a single large, centralized production processing facility and hav
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Answer:

Centralized production processing facility considers top management as the apex of decision making.

In decentralized production processing the decision making is delegated to teams and multiple individuals.

Explanation:

Centralized facility:

Pros:

a. In centralized facility top management commitment helps in improved decision making

b. Allocation of budgets to improve production processes.

c. The process becomes a part of strategic planning.

d. Standardization of processes like Mcdonalds kitchen.

e. Lower costs

f. Better forecasting

Cons:

a. Lack of flexibility

b. In case of international chains customers may be dissatisfied with standardized procedures

c. No room for customization

Decentralized Facility:

Pros:

a. Flexibility

b. Customer oriented approach

c. lack of bureaucratic procedure

d. quick decision making

Cons:

a. No standardization

b. Every Team has its own benchmarking process to evaluate performance.

c. Costly

d. Planning, budgeting and forecasting is effected adversely.

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