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Zolol [24]
3 years ago
12

Dividends-R-Us, Corp. is paying a dividend of $3 a share today. It is expected that the company will continue its policy of incr

easing its dividend 8% a year every year. If you require a 14% rate of return to invest in this company, what is the maximum amount you would be willing to pay for a share of the company’s stock?
Business
1 answer:
leonid [27]3 years ago
5 0

Answer:

Amount for each stock to be paid at maximum = $54

Explanation:

Using Dividend growth model, we have,

P_0 = \frac{D_1}{K_e - g}

Where P_0 = Expected price of share today

D_1 = Dividend to be paid at this year end

= D_0 + g

K_e = Required return on investment

g = Growth rate

Therefore,

D_1 = = $3 + 8% = $3.24

P_0 = \frac{3.24}{0.14-0.08}

P_0 = $54

Therefore, current price for this share or sock to be paid = $54 per share.

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Kenny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $8
Zarrin [17]

Answer:

$34,590,000

Explanation:

Kenny incorporation is looking at setting up a new manufacturing plant in South park

The company purchased some lands six years ago $8.4 million

The land will net $11.2 million if sold today

The plant will cost $22.4 million to build

The site requires $990,000 worth of grading before construction

Therefore the proper cash flow can be calculated as follows

= opportunity costs + costs + upgradation

= $11,200,000 + $22,400,000 + $990,000

= $34,590,000

Hence the proper cash flow is $34,590,000

6 0
3 years ago
Which of the following activities are prohibited by the Clayton Act when they lead to less competition? Each of these answers is
mariarad [96]

Answer: All of the Above

Explanation:

The Clayton Act of 1914 was passed to curb unfair business practices as well as to protect the rights of labour.

Some practices that were prohibited when they led to less competition include,

- A firm acquiring a major percentage of the stocks of a competing firm because this could signify an amalgamation of efforts on the part of both firms and they could therefore have some control over Pricing.

-A director from one business sitting on the board of a competing firm because this could lead to cooperating or Corperate espionage.

- A buyer is forced to buy multiple products from a producer in order to get a desired product is expressly forbidden.

5 0
3 years ago
Product V72 sells for $20 per unit as is, but if enhanced it can be sold for $25 per unit. The enhancement process will cost $52
Furkat [3]

Answer:

It will incur an Opportunity cost of $8,000.

Explanation:

It will incur the opportunity cost of $8000 because the additional unit produces by the company then the additional revenue that is generated will be equal to the amount (25 - 20) x 12,000 = 60,000. Since the additional cost, that incurs for the production of 12000 units is 52000. Therefore the profit earned is $8000.

So if the company does not produce it then it will lose the profit of $8000.

3 0
3 years ago
How do keynesian economic policies differ from the traditional laissez-faire policies developed by adam smith?
shusha [124]
Keynesian economic basically means that the goverment has to step in and try to stimulate economic wealth. This is were macroeconomics comes to play. Laissez fair in Belgium means hands off or lay. This explains why laissez fair is a strategy our previous presidents used to stop the Great Depression. In other words it means the govermeant steps out of helping hand and count on capitalism.
5 0
3 years ago
Leather Shop earned net income of $ 71,000 after deducting depreciation of $ 5,000 and all other expenses. Current assets decrea
Thepotemich [5.8K]

Answer:

$89,000

Explanation:

Given that,

Net Income = $71,000

Depreciation = $5,000

Increase in Current Liabilities = $9,000

Decrease in Current Assets = $4,000

Net Cash from Operating Activities:

= Net Income + Depreciation + Increase in Current Liabilities + Decrease in Current Assets

= $71,000 + $5,000 + $9,000 + $4,000

= $89,000

Therefore, the Leather Shops cash provided by operating activities​ (indirect method) is $89,000.

7 0
3 years ago
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