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777dan777 [17]
3 years ago
11

ABC Co. is expecting to pay a dividend of $1.98 in the upcoming year and further anticipates growing the dividend at a constant

rate of 3.5% per year, indefinitely. If the current share price is $25, then what is the cost of equity according to the Gordon Growth Model?
Business
1 answer:
KatRina [158]3 years ago
8 0

Answer:

0.1142 or 11.42%

Explanation:

In this question, we apply the Gordon Growth model which is presented below:

= (Current year dividend ÷ current share price) + Growth rate

= ($1.98 ÷ $25) + 3.5%

= 0.0792 + 0.035

= 0.1142 or 11.42%

We simply applied the above formula to find out the cost of equity by considering the current year dividend, current share price ,and the growth rate

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The new bridge would require 14 piers to support it and it was known that each time a pier is sunk into the harbor it would take
Sergeu [11.5K]

Answer:

$21,000

Explanation:

The new bridge would take 30 man hours of labor at $50 per hour, in activity based costing, this means that ,

30*50 = 1500.

Now, it will require 14 piers to support it each time a pier is sunk into the harbor,hence the final calculation will be:

30*50*14 = 21000.

Hope this Helps.

Goodluck.

6 0
3 years ago
SME Company has a debt-equity ratio of .57. Return on assets is 7.9 percent, and total equity is $620,000. a. What is the equity
PtichkaEL [24]

Answer:

(i) 1.57

(ii) 12.40%

(iii) $76,898.60

Explanation:

Debt-equity ratio = debt/equity

Hence debt= 0.57 equity

= (0.57 × 620000)

= $353,400

Total assets = debt + equity

                     = (353400+620000)

                    = $973400

1. Equity multiplier = Total assets ÷ Equity

                               = $973,400 ÷ 620,000

                               = 1.57

3.  ROA = net income ÷ Total assets

net income = ($973,400 × 0.079)

                    = $76,898.60

2. ROE = net income ÷ Total equity

= $76,898.60 ÷ 620,000

= 12.40%(Approx).

7 0
4 years ago
The kitchen manager at an Italian restaurant is deciding what assignments he should give to his two cooks, John and David. John
Gemiola [76]

Answer:

The answer is: David should make pizza and John should make pasta.

Explanation:

John is more efficient at producing both pizza and pasta, but considering he can only make one at a time we calculate David´s productivity compared to John´s.

David is 80% as productive as John in making pizza, and only 75% as productive in making pasta.

David should be in charge of making pizza because his productivity is closest to John´s.

7 0
4 years ago
Which term describes a distribution of the company’s assets back to the owners of the business?.
FromTheMoon [43]

Which term describes a distribution of the company’s assets back to the owners of the business?

Answer:

When a Company redistributes its assets back to the owners of the business it is referred to as a dividend.

A dividend is a distribution of income by means of a agency to its shareholders. when a organization earns a profit or surplus, it can pay a share of the earnings as a dividend to shareholders. Any quantity not disbursed is taken to be re-invested inside the business.

What's an funding dividend?

Dividends are bills that a company makes to shareholders. While you own shares that pay dividends, you are becoming a share of the corporation's income. This lets in you to receive a circulate of earnings on pinnacle of any growth for your portfolio's market value.

What is a good dividend?

In standard, dividend yields of 2% to 4% are taken into consideration sturdy, and anything above 4% can be a fantastic purchase—but also a unstable one. While comparing shares, it is important to examine more than just the dividend yield.

How is a dividend paid?

As a way to gather dividends on a stock, you truly need to very own shares in the corporation thru a brokerage account or a retirement plan which includes an IRA. when the dividends are paid, the cash will robotically be deposited into your account.

Learn more about dividend here:- brainly.com/question/25845157

#SPJ4

3 0
2 years ago
Suppose a relative has promised to give you $1,000 as a gift the day you graduate. Assuming a constant interest rate of 5%, cons
Minchanka [31]

Answer:

a.

Date Received        Present Value            Value in 1 year    Value in 2 years

Today                                1,000                           $1,050               $1,102.50

In 1 year                           $952.38                      $1,000

In 2 years                        $907.03                                                  $1,000

Future value in 1 year if $1,000 is received today:

= 1,000 * (1 + 5%)

= $1,050

Future value in 2 years:

= 1,000 * ( 1 + 5%)²

= $‭1,102.5‬

Present value if $1,000 received in a year:

= 1,000/(1 + 5%)

= $952.38

If received in 2 years:

= 1,000 / (1 + 5%)²

= $907.03

b. The present value of the gift is <u>smaller</u> if you get engaged in two years than it is if you get engaged in one year.

6 0
3 years ago
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