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AnnyKZ [126]
3 years ago
7

George Jefferson established a trust fund that will provide $170,500 per year in scholarships. The trust fund earns an annual re

turn of 2.1 percent. How much money did Mr. Jefferson contribute to the fund assuming that only income is distributed?
Business
1 answer:
Dimas [21]3 years ago
4 0

Answer:

$8,119,048

Explanation:

Given that,

Amount of scholarships = $170,500 per year

Trust fund earns an annual rate of return = 2.1 percent

Let x be the amount contribute to the fund and assuming that only income is distributed,

2.1% of x = Amount of scholarships

0.021x =  $170,500

x = $170,500 ÷ 0.021

  = $8,119,048

Therefore, the amount of money that is contributed by the George Jefferson to the trust is $8,119,048.

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Equal to the physical units completed

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2 years ago
Storico Co. just paid a dividend of $1.85 per share. The company will increase its dividend by 24 percent next year and will the
Leto [7]

Answer:

$33.26

Explanation:

We calculate the cashflow for each year

being

1.85 x (1 + 24%) = 2.294

2.294 x (1+18%) =

2.70692 x (1+12%) = 3.0317504

Then, we solve for the dividend grow model being the presnet value of the future cash dividends growing at 6%

\frac{D_0(1+g)}{r-g} = PV\\\frac{D_1}{r-g} = PV

3.0317504(1+.06) / (0.14 - 0.06) = 40.1706928

Last, we discount each one by the required return as they are ahead of time and not at present date

\left[\begin{array}{ccc}Year&cashflow&PV\\&1.85&\\1&2.294&2.0123\\2&2.70692&2.0829\\3&3.0317504&2.0463\\3&40.1706928&27.1141\\&TOTAL&33.2556\\\end{array}\right]

5 0
3 years ago
If the owner of a company withdrew 200 during a period the closing entry for the owner withdrew account would show a
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Explanation:

2

4 0
3 years ago
Bad Boys, Inc. is evaluating its cost of capital. Under consultation, Bad Boys, Inc. expects to issue new debt at par with a cou
timofeeve [1]

Answer:

9.09%

9.327%

Explanation:

For computing the weighted cost of capital first we have to determine the cost of preferred stock, cost of common stock and the after cost of debt is shown below:

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= Preferred dividend ÷ market price of preferred stock

= $2.50 ÷ $25

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And, the after cost of debt is

= Before cost of debt × (1 - tax rate)

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Now the WACC is

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= Weightage of debt × cost of debt + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of  common stock) × (cost of common stock)

= (0.30 × 5.2%) +  (0.05 × 10%) +  (0.65 × 12.5%)

= 0.702 + 0.5 + 8.125

= 9.327%

4 0
3 years ago
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