Service Revenue.................................65000
Rent Revenue..........................................6000
To Income Summary.....................................................71000
Income Summary..........................78900
To Depreciation Expense..............................................7000
To Salaries Expense.......................................................56400
To Utilitites Expense.........................................................15500
Retained Earnings.....................................................................7900
To Income Summary...............................................................................7900
Answer:
The stock A is most valuable as the fair value of Stock A is $100 which is more than the fair value of Stock B ( $83.33) and Stock C ($34.28).
Explanation:
to calculate the fair price of the stocks, we will use the DDM or dividend discount model. The DDM bases the value of a stock on the present value of the expected future dividends from the stock.
Let r be the discount rate which is 10%.
a.
The stock is like a perpetuity as it pays a constant dividend after equal intervals of time and for an indefinite period.
The price of this stock can be calculated as,
Price or P0 = Dividend / r
P0 = 10 / 0.1 = $100
b.
The constant growth model of DDM can be used to calculate the price of this stock as its dividends are growing at a constant rate forever.
P0 = D1 / r - g
Where,
- D1 is the dividend for the next period
- r is the cost of equity or discount rate
- g is the growth rate in dividends
P0 = 5 / (0.1 - 0.04)
P0 = $83.33
c.
The price of this stock can be calculated using the present of dividends.
P0 = 5 / (1+0.1) + 5 * (1+0.2) / (1+0.1)^2 + 5 * (1+0.2)^2 / (1+0.1)^3 +
5 * (1+0.2)^3 / (1+0.1)^4 + 5 * (1+0.2)^4 / (1+0.1)^5 + 5 * (1+0.2)^5 / (1+0.1)^6
P0 = $34.28
Answer:
Letter a is correct. <u>Situational factors.</u>
Explanation:
Situational factors are defined as the set of temporary environmental factors that will influence consumer behavior in the purchasing process.
These may include:
- <u>the physical environment:</u> physical characteristics that influence purchase such as the organization and size of space.
- <u>the social environment:</u> influence of consumption by other people.
- <u>the task:</u> convenience of purchase for some reason.
- <u>the time:</u> time the person has to make a purchase.
- <u> antecedent psychological states:</u> spirit and psychological states that influence people to buy.
9%, as the unadjusted rate of return is equal to the average yearly net income growth rate divided by the initial investment's net cost.
<h3>Calculation:</h3>
$40,090 divided by $430,00 is.093 * 100, or 9%.
<h3>If the needed rate of return is 6%, what is the present value of a cash inflow of $2,000 five years from now? Examine later?</h3>
$2600 will be given to the recipient after five years.
<h3>If the internal rate of return is 5% and the desired rate of return is 6%, should management accept the investment opportunity?</h3>
No, as the internal rate of return on the investment is lower than the intended rate of return.
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Answer:
Basic earning per share = $3.69
Explanation:
Earning per share (EPS) = earnings available to ordinary shareholders/ number of ordinary shares
Number of ordinary shares = 390,000 × 2 = 780,000 units
Net income 2,900,000
Preferred dividend <u> ( 24,000)</u>
Earnings available to shareholders <u>2,876,000</u>
Number of ordinary shares 780,000 units
Earnings per shares = $2,876,000/780,000 units
= $3.69
