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melomori [17]
3 years ago
9

Assume that at the end of the next year, Company A will pay a $2.00 dividend per share, an increase from the current dividend of

$1.50 per share. After that, the dividend is expected to increase at a constant rate of 5%. If an investor requires a 12% return on the stock, what is the value of the stock?
Business
1 answer:
Bezzdna [24]3 years ago
4 0

Answer:

The  value of the stock is $28.57

Explanation:

Data provided in the question:

Dividend paid at the end of the year, D1 = $2.00 per share

Increase in dividend = $1.50 per share

Growth rate, g = 5% = 0.05

Required rate of return = 12% = 0.12

Now,

Price with constant Dividend Growth model = D1 ÷ ( r - g )

= $2 ÷ ( 0.12 - 0.05 )

= $28.57

Hence,

The  value of the stock is $28.57

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Answer:

Option D

Explanation:

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And considering that if the actual labor rate exceeds the standard labor rate and if the actual labor-hours exceed the number of hours allowed, the total labor flexible budget variance will be unfavorable. As the variance is the difference between the Standard Cost and Actual Cost. So if both Standard rate & Standard hrs. are more than actual rate & actual hrs., Actual cost will be more than standard cost i.e. the variance will be unfavorable

Option d is correct

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3 years ago
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Answer:

violates the matching principle

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In Accounting, one of the weaknesses of the direct write-off method is that it violates the matching principle.

The direct write-off method is a method of accounting for uncollectible receivables.

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Insurance protects you from associated risks, Match each scenario to the insurance
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<h3>What is insurance?</h3>

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8 0
2 years ago
This card works like a short-term loan? <br> A. debit<br> B. credit
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4 0
2 years ago
Read 2 more answers
The accounting equation is assets = liabilities + owner’s equity.
Anon25 [30]

Answer:

A. Why must this equation always balance?

It must balance because all the assets that firm controls have been acquired either by external funding (liabilities), or by internal funding (owner's equity).

This also explains the relationship between economic resources and claims to economic resources. Economic resources (assets) are either the claim of an external agent that has to be paid in the future (liability), or the claim of one of the company's owners who could in theory dissolve the company and take possession of the company's assets (equity).

B. What transactions increase or decrease owner’s equity?

Profits increase owner's equity, as well as capita contributions, whether in the form of stocks, equipment, or other financial instruments.

Costs and expenses are substracted from revenues, and therefore they reduce profits, and owner's equity.

C. How does net income or loss affect owner’s equity?

A net income profit increases owner's equity, while a net income loss decreases owner's equity.

D. Please give an example of a transaction, applied to the accounting equation.

ABC corporation issues 1,000 common stocks with par value of $5, and a price per stock of $7. The journal entry is:

Account                                    Debit                Credit

Cash                                        $7,000

Common Stock                                                 $5,000

Additional Paid-In Capital                                $2,000

In this transaction, cash is an asset and common stock and additional paid-in capital are part of the stockholder's equity. The corporation does not have any liabilities yet.

ABC Corp accounting equation = Assets = Liabilities + Stockholder's equity

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As can be seen, the accounting equation is true even in the earliest stages of the corporation.

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