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
mariarad [96]
3 years ago
10

Analysts are forecasting LifeTech Corporation's common stock price to be $120 at the end of one year. Also, LifeTech will pay a

dividend of $2.60 one year from now. You plan to buy the stock now and sell at the end of one year. If you require a 13% return, what would you be willing to pay to buy the stock now
Business
1 answer:
devlian [24]3 years ago
5 0

Answer:

Price to pay now for the stock = $96.278

Explanation:

<em>The price of the stock would be the present value(PV) of the future cash flow expected from it discounted at the required rate of 13%</em>

<em>Hence we would add the present value of he dividend and the resent of he price at the end of the period</em>

PV = CF × (1+r)^(-n)

<em>CF- Cash Flow</em>

<em>R- rate of return- 13%</em>

<em>n- number of years</em>

PV of dividend =  2.60 × (1.13)^(-1) =  2.30

PV of stock price after a year = 120× (1.13)^(-1) = 93.97

Price to pay now for the stock =  2.30 + 93.97 = $96.278

Price to pay now for the stock = $96.278

You might be interested in
Empirical studies of returns earned by mutual funds suggest they consistently outperform the market.True or False?
VMariaS [17]

Answer:

False

Explanation:

Studies of mutual fund performance indicate that mutual funds that outperformed the market in one time period usually do not beat the market in the next time period.

7 0
3 years ago
48. What is the economic process or activity of producing goods and
fgiga [73]

Answer:

O C. Production

Explanation:

Production is the organized activity of combining different materials (inputs) to make consumable goods and services. It is the process of converting resources to finished products and services for sale. Production occurs to meet the demand for the goods and services in the market.

Entrepreneurship involves the generation of an idea and transforming it into a profitable business. Factors of production are the inputs necessary for making goods and services. These factors of production (inputs) are the ingredients in the production process.

7 0
3 years ago
Choose 3 to 4 companies or organizations to review their policies. How do they differ and how might they be the same. Submit the
Angelina_Jolie [31]
  • Apple
  • Starbucks
  • Godrej industries

Explanation:

Policies of Apple:

  • Innovation: Apple has given more than what we have expected.
  • Integrity: Apple has stayed true to itself and doesn't copy.
  • Originality: The reinvention of features has made Apple stand out.

Policies of Starbucks:

  • Expand its stores in the US and internationally by franchising/licensing.
  • Designing stores that convey Starbucks image and brand.
  • Expand product offerings beyond its retail stores& enter new markets.

Policies of Godrej Industries:

  • Godrej industries aims to provide innovation and quality products.
  • Commited not only to consumers but also society and environment.
  • Excellent standards of ethical behaviour.
3 0
3 years ago
An accord is an agreement by the parties to offer and accept some performance different from that originally bargained for. the
Tema [17]
The answer is satisfaction. It is the legal consideration which binds the parties to the settlement. A valid accord does not discharge the prior contract; instead, it appends the right to enforce it in accordance with the terms of the accord contract, in which satisfaction. The performance of the contract will discharge both contracts. If the creditor breaches the accord, then the debtor will be able to bring up the existence of the accord in order to enjoin any action against him.
5 0
3 years ago
Andretti Company has a single product called a Dak. The company normally produces and sells 88,000 Daks each year at a selling p
Anna [14]

Answer:

1a. Incremental net income $ 860,560

1b. Yes, the additional investment will be justified because the cost which is justified as incremental contribution is more than enough to cover for the incremental fixed selling expenses

1c. Breakeven cost for order $ 23.8

Explanation:

Calculation for the contribution margin per unit

Selling price per unit $ 60

Variable cost per unit as

Direct materials 7.50

Direct labor 10.00

Variable manufacturing overhead 1.90

Variable selling expenses 2.70

Total variable cost per unit 22.1

Contribution margin per unit $ 37.9

(60-22.1)

1a. Computation for the incremental operating income

Incremental contribution margin$ 1,000,560

(26,400 units*37.9)

Incremental fixed costs$ 140,000

Incremental net income $ 860,560

Incremental units = 114,400-88,000 = 26,400 units

1b. Yes, the additional investment will be justified because the cost which is justified as incremental contribution is more than enough to cover for the incremental fixed selling expenses.

1c. The breakeven price per unit will not include current fixed costs because the order will be only for the incremental costs of the units

Variable cost per unit as

Direct materials 7.50

Direct labor 10.00

Variable manufacturing overhead 1.90

Variable selling expenses (i.e. shipping cost only) 2

Import duties 1.70

Permits and licenses (18,480/26,400) 0.7

Breakeven cost for order $ 23.8

4 0
3 years ago
Other questions:
  • Culture is an integral part of any organization. Please define culture, how is it created, and give three examples of companies
    6·1 answer
  • Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand
    6·1 answer
  • Nishi Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes ar
    13·1 answer
  • A corporate CEO wished to relay good news about the prospect of a new technology being created, but was reluctant to do so. Inst
    15·1 answer
  • Where do banks get money to lend to borrowers?
    8·1 answer
  • Abner tells a representative of Brass &amp; Woodwind Musical Instruments, Inc., that he will pay for Claudia’s trumpet if she do
    6·2 answers
  • A project has sales of $511,800, costs of $322,400, depreciation of $22,620, interest expense of $3,062, and a tax rate of 34 pe
    8·1 answer
  • ABC uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retai
    13·1 answer
  • The principle of self-reference is based on the idea that people won't deviate from the overall mission of their organization if
    7·1 answer
  • Lemony lemonade has​ 3,200 gallons of lemonade in wip​ inventory, with​ 76% of materials already added. The lemonade is​ 50% thr
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!