Answer:
D. $605,500
Explanation:
At the end of 2014, the Retained Earning balance was $533,000. This serves as our beginning balance for the year 2015.
Furthermore, Dividends are expected to be paid out, i.e. a deduction on the balance sheet.
Retained Earnings on the 2015 budgeted balance sheet = Beginning Balance + Expected Net Income - Expected Dividend
=533,500+112,000-40,000
=$605,500
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Answer:
It would sell for 761.49 dollars
Explanation:
Generally, stock prices are determined on stock market based on supply and demand mechanism. However, according to the discount dividend model present value of stock could be calculated as dividend per share/(cost of capital equity-growth rate). Growth rate between year 1 and 2 is 3-4/4 equals to -0.25%. From year 2 until year 3 it is 46-3/3 equals to 14.33%. Now we can take arithmetic average of these two and we get 7.04%( 14.33-0.25/2). Finally share could sell today for 46+3+4/(14-7.04%) equals to 761.49 dollars
Answer:
the required rate of return i r=0.13%
Explanation:
In order to calculate the required rate of interest in the case of a perpetual preferred stock we will use the following formula:
P(p) = D(p) / r
where P(p) is the preferred price of the stock, D(p) is the preferred dividend price and r is the required rate of interest.
This gives us the following values:
30 = 4 / r
r = 4 / 30
r = 0.13%
