1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
LekaFEV [45]
3 years ago
10

Assume that Kish Inc. hired you as a consultant to help estimate its cost of common equity. You have obtained the following data

: D0 = $0.90; P0 = $27.50; and g = 7.00% (constant). Based on the DCF approach, what is the cost of common equity?
Business
1 answer:
Kobotan [32]3 years ago
8 0

Answer:

Cost of equity= 10,50%

Explanation:

The cost of equity is the return a company requires to decide if an iThe cost of equity is the return a company requires to decide if an investment meets capital return requirements. A firm's cost of equity represents the compensation the market demands in exchange for owning the asset and bearing the risk of ownership.

Cost of equity= (D1/P0)+g

D1= next year dividend (D0*

P0=actual price

g= growth rate of dividends

In this exercise:

D1=D0*(1+g)=0,90*1,07=$0,963

P0=$27,50

g=0,07

Cost of equity= 0,963/27,5+0,07=0,1051=10,50%

You might be interested in
Gradwell, Inc., manufactures and sells two products: Product K8 and Product I4. Data concerning the expected production of each
lisabon 2012 [21]

Answer:

Gradwell, Inc.

The overhead applied to each unit of Product I4 under activity-based costing is closest to:_______.

$243.00 per unit.

Explanation:

a) Data and Calculations:

production per unit                       DL rate   Total Labor Cost

product K8    300    5.0     1,500   $17.20       $25,800

product I4     900     3.0   2,700    $17.20        $46,440

total direct labor hours    4,200   $17.20        $72,240

production per unit       Direct Materials   Total Material Cost

product K8    300          $150.20                   $45,060

product I4     900          $243.70                    219,330

Total direct materials costs =                      $264,390

Estimated Expected activity

Activity Cost Pools Activity Measures  Overhead  Product  Product  Total          

                                                                   Cost          K8           I4

labor related            DLHs                 $176,064       1,500       2,700   4,200

machine setups       setups                   71,290         400          600    1,000

order size                MHs                      121,396      4,300       4,600   8,900

Total                                                  $368,750

Overhead  Cost Allocation  Product    Product    Total          

                                                K8             I4

Labor cost                         $62,880    $113,184  $176,064

Machine setups                   28,516      42,774       71,290

Order size                           58,652     62,744      121,396

Total                                $150,048  $218,702  $368,750

Quantity                                300          900

Overhead per unit          $500.16    $243.00

4 0
2 years ago
The exchange rate between the British pound and the U.S. dollar is 2. In England, the price level is 1.0 and the one-year intere
kifflom [539]

Answer:

C) 1.6

Explanation:

The real exchange rate is calculated by multiplying the nominal exchange rate by the price level of the countries:

nominal exchange rate = 2 US dollars per British pound = $2/£

real exchange rate = $2/£ x (US price level / British price level) = $2/£ x 0.8 = $1.6/£

8 0
3 years ago
Product differentiation refers to: consumers who sort and group goods based on similar characteristics. firms who offer similar
Luba_88 [7]

Answer:

firms who offer similar products to their competitors' products, but that are more attractive in some way

Explanation:

Product differentiation is marketing strategy where a firm makes its different from that of its competitors in order to make the product more attractive to consumers

3 0
2 years ago
Mountain Dental Services is a specialized dental practice whose only service is filling cavities. Mountain has recorded the foll
Ivenika [448]

Answer:

Instructions are listed below

Explanation:

Giving the following information:

The high-low method involves taking the highest level of activity and the lowest level of activity and comparing the total costs at each level.

Mountain has recorded the following for the past nine months:

January:

Number of Cavities= 375

Total cost= $5,300

February:

Number of Cavities  500

TC= 5,850

March

Number of Cavities 350

TC= 5,200

April

Number of Cavities 600

TC=6,250

May

Number of Cavities 325

TC= 5,150

June

Number of Cavities 475

TC= 5,700

July

Number of Cavities 525

TC= 6,100

August

Number of Cavities  575

TC= 6,300

September

Number of Cavities  450

TC= 5,550

A) Variable cost= (Highest activity cost - lowest activity cost) / (Highest activity units - lowest activity units)

Variable cost= (6300 - 5150) / (600 - 325)= 4.18 per unit

Fixed cost= HACost - (variable cost per unit * HAUnits)= 6300 - (4.18*600)= 3792

Fixed cost= LACost - (variable cost per unit* LAUnits)= 5150 - (4.18*325)= 3792

B)  Q= 400

Total cost= 3792 + 4.18*400= $5464

8 0
3 years ago
Pete offered Liz a job at his new law firm. In anticipation, Liz quit her job at Mega Firm, bought a new computer and invested i
MissTica

Alcohol hand sanitizer

6 0
3 years ago
Other questions:
  • In 2009 President Obama and Congress increased government spending. Some economists thought this increase would have little effe
    7·1 answer
  • Assume you can currently exchange one U.S. dollar for one hundred Japanese yen. Also assume the inflation rate will be 2.5 perce
    14·1 answer
  • Samantha, a famous artist, has a contract with Alec to paint his portrait for $6,000. Samantha is very busy and wants to delegat
    8·1 answer
  • The following data is from the income statement of Ralston Company: Revenue$36,000 Cost of goods sold (14,400) Operating expense
    8·1 answer
  • Do you think expenditure on road building and maintenance is an on-budget or off-budget expenditure?
    7·1 answer
  • At Eady Corporation, maintenance is a variable overhead cost that is based on machine-hours. The performance report for July sho
    5·1 answer
  • The likelihood that a decision maker will ever receive a payoff precisely equal to the EMV when making any one decision is: a. L
    8·1 answer
  • After Sandra finishes making her list, she does a bit of research to learn about the different technologies available. She
    11·1 answer
  • A particle is moving along a projectile path at an initial height of 160 feet with an initial speed of 144 feet per second. this
    8·1 answer
  • When starting a business, more women choose ________ industries that tend to have lower average sales levels.
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!