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schepotkina [342]
4 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]4 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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The next items to subtract from net sales in order to compute net income for a merchandiser are <u>Expenses</u>.

<h3>What are the expenses for a merchandiser?</h3>

The expenses for a merchandiser include selling and distribution expenses.  Others are administrative expenses, including depreciation for long-term assets, and tax expenses.

Thus, o compute net income for a merchandiser, you will start with net sales, subtract the cost of goods sold and subtract other <u>expenses</u>.

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4 years ago
A farmer shows up at a tractor dealership with $150,000 to buy a tractor priced at $148,875. The excess after buying the tractor
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The amount that the farmer paid for the tractor, which is the net price after discounts, is $126,543.75.

<h3>What is the net price?</h3>

The net price is the difference between the sticker price and the discount of 15% received off the sticker price.

<h3>Data and Calculations:</h3>

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Amount paid = $126,543.75 ($148,875 x 1 - 0/15)

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