Why do managers consider direct costs to be more accurate than indirect costs?

Portman Industries just paid a dividend of $1.68 per share. The company expects the coming year to be very profitable, and its d

alisha [4.7K]

Answer:

What is the expected dividend yield for Portman's stock today?

d. 6.40%

Suppose Portman is considering issuing 62,500 new shares at a price of $26.78 per share. If the new shares are sold to outside investors, by how much will Judy's investment in Portman Industries be diluted on a per-share basis?

a. $0.52 per share

Thus, Judy's investment will be diluted, and Judy will experience a total loss of $0.52 x 7,500 = $3,900

Explanation:

cost of equity = Re = risk free rate of return + (Beta × market premium) = 5% + (0.90 x 6%) = 10.4%

dividend in one year = $1.68 x 120% = $2.016

intrinsic stock price = $2.016 / (10.4% - 4%) = $31.50

expected dividend yield = dividend / stock price = $2.016 / $31.50 = 6.4%

Judy's loss per share = ($31.50 - $26.78) x (62,500 / 562,500) = $0.5244

7 0

3 years ago

Which of the following principles underlies the interaction of individual choices? a Marginal analysis is used for "how much" de

GalinKa [24]

Answer:

d There are gains from trade.

Explanation:

A trade can be defined as the process that typically involves the buying and selling of goods and services between a buyer (consumer) and a seller (producer).

Thus, trade creates an enabling environment that suits a specific service provider or producer of a particular product.

Basically, the interaction of individual choices underlies the fact that there are gains from trade.

This ultimately implies that, as a result of the difference between human needs and wants, there is always an opportunity for various producers to manufacture goods and services to meet the needs or requirements of these customers.

6 0

3 years ago

RJ Miller Manufacturing Company produces a product that sells for $120. A selling commission of 10% of the selling price is paid

djverab [1.8K]

Answer:

$48

Explanation:

Contribution = Sales - Variable Costs

where,

Sales = $120

Variable Costs = $120 x 10% + $60 = $72

therefore,

Contribution = $120 - $72 = $48

The contribution margin per unit is: $48

6 0

3 years ago

The Acme Widget Company has found that if widgets are priced at s 389, then 1000 will be sold. They have also found that for eve

kvv77 [185]

Answer:

See the explanation below.

Explanation:

a. The number of widgets that will be sold

Let y represent the number of widgets that will be sold, and and we already have x as price of widget, we therefore have:

y - 1,000 = (-600/10) * (x - 389)

y - 1,000 = -60 * (x - 389)

y = 1,000 - [60 * (x - 389) ]

y = 1,000 - 60x + 23,340

y = 24,340 - 60x

b. The revenue generated by the sale of widgets

Let R represent Revenue, therefore we have:

R = xy

R = x(24,340 - 60x)

R = 24,340x - 60x²

c. The cost of producing just enough widgets to meet demand

Let C represent total cost, we therefore have:

C = 8,000 + 97.25y

C = 8,000 + 97.25(24,340 - 60x)

C = 8,000 + 2,367,065 - 5,835x

C = 2,375,065 - 5,835x

d. The proft from selling widgets

Let P represent profit, we therefore have:

P = R - C

P = 24,340x - 60x² - (2,375,065 - 5,835x)

P = 24,340x - 60x² - 2,375,065 + 5,835x

P = - 60x² + 30,175x - 2,375,065

e. Find the price that will maximize profits from the sale of widgets

Profit is optimum when dP/dx = 0

Therefore, we have

0 = - 120x + 30,175

120x = 30,175

x = 30,175/120 = $251.46

4 0

3 years ago

Which of the following actions can NEGATIVELY impact your credit score?

Fudgin [204]

It would be B hope this helps!

3 0

3 years ago

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Why do managers consider direct costs to be more accurate than indirect​ costs?

Why do managers consider direct costs to be more accurate than indirect costs?