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Alina [70]
3 years ago
9

Fire Hydrant Pet Supply just paid its first annual dividend of $0.75 a share. The firm plans to increase the dividend by 2.9 per

cent per year indefinitely. What is the firm's cost of equity if the current stock price is $16.90 per share
Business
1 answer:
AleksandrR [38]3 years ago
8 0

Answer:

Cost of equity =  7.47%

Explanation:

<em>The Discounted Cash flow (DCF) Model; This is a technique used to value the worth of an asset. According to this model, the value of an asset is the sum of the present values of the future cash flows that would arise from the asset discounted at the required rate of return. </em>

Using this model,  the required rate of return is the cost of equity. It is given below as follows:

Cost of equity (Ke) =( D(1+g)/P) + g

Div in year 0, P= ex-div market price, g= growth rate in div.

D- 0.75 , g- 2.9%, P-16.90

For this question,

Ke= ( 0.75×(1+0.029)/16.90 ) + 0.029

=0.0746 × 100  

= 7.47%

Cost of equity =  7.47%

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Answer and Explanation:

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7 0
2 years ago
On December 31, 2021, Harris Co. leased a machine from Catt, Inc. for a five-year period. Equal annual payments under the lease
densk [106]

Answer: $5,222,400

Explanation:

Here is the complete question:

On December 31, 2021, Harris Co. leased a machine from Catt, Inc. for a five-year period. Equal annual payments under the lease are $2,100,000 (including $100,000 annual executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2021, and the second payment was made on December 31, 2022. The five lease payments are discounted at 10% over the lease term. The present value of lease payments at the inception of the lease and before the first annual payment was $8,756,727. The lease is appropriately accounted for as a finance lease by Harris. In its December 31, 2022 balance sheet, Harris should report a lease liability of

a. $6,340,000.

b. $6,240,000.

c. $5,706,000.

d. $5,222,400

In its December 31, 2022 balance sheet, Harris should report a lease liability of:

Present value of annual lease payments = $8,756,727

Less: Annual lease payment on December 31, 2021 = $2,100,000

Less: Annual lease payment on December 31, 2022 = $2,100,000

Add: Interest expense on lease liability = $665,673

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6 0
3 years ago
Logan purchased a rental home and lot for $150,000. Her expenses totaled $5,000. Lots in the area sell for approximately $10,000
lana [24]

Answer:

The correct response is "145,000 ".

Explanation:

The given values are:

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= $150,000

Expenses,

= $5,000

Selling cost,

= $10,000

Now,

Logan's basis for depreciation will be:

= Purchased \ cost+Expenses-Selling \ cost

On putting the values, we get

= 150000+5000-10000

= 155000-10000

= 145,000 ($)

3 0
2 years ago
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Answer:

definition by etymology

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In languages ​​with a long written history, etymology is a discipline related to philology and historical linguistics, which includes the study of the origin of words by investigating their original meaning, their structure, as well as their diachronic evolution, that is, possible changes that have occurred over time.

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