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Alborosie
3 years ago
12

Brickhouse is expected to pay a dividend of $2.85 and $2.34 over the next two years, respectively. After that, the company is ex

pected to increase its annual dividend at 3.3 percent. What is the stock price today if the required return is 10.7 percent
Business
1 answer:
irina1246 [14]3 years ago
6 0

Answer:

The stock price is $31.14

Explanation:

The value of Brickhouse stock today is the present values of future cash flows from the stock discounted using the required rate of return of 10.7% as the discount  rate as done below:

Years               cash flows  discount factor                        Present values

1                            $2.85     1/(1+10.7%)^1=0.903342367        $2.57

2                            $2.34    1/(1+10.7%)^2=0.816027432         $1.91

3 & beyond          *$32.67  1/(1+10.7%)^2=0.816027432         $ 26.66  

                                                             total present values= $31.14

* the year 3 and beyond represents the terminal value of the stock,which is computed using the formula below

=D2*(1+g)/r-g

D2 is the year dividend of $2.34

g is the dividend growth rate of 3.3%

r is the required rate of return which 10.7%

terminal value=$2.34*(1+3.3%)/(10.7%-3.3%)

                        =2.41722 /0.074 =$32.67  

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Colley Company uses the allowance method for bad debts and has the following information before the year end adjusting entry: Ac
Leona [35]

Answer:

If the company used the percentage of sale method and estimates bad debts to be 2% of sales what is the amount of bad debt expense:

  • D) 15,500

If the company uses the percentage of accounts receivable method and estimates 4% of accounts receivable will be uncollectible

  • A) 4,300

Explanation:

  • The percentage of sale method  

                  800,000  2%  16,000  

Initial Balance  

Accounts Receivable $ 120,000  

Allowance for Uncollectible Accounts  $ 500

Allowance for Uncollectible Accounts $ 15,500  

Accounts Receivable  $ 15,500

  • Accounts Receivable Method  4%  4,800  

Bad debt expense $ 4,300  

Allowance for Uncollectible Accounts  $ 4,300

8 0
3 years ago
You want to make sure your account reflects the spending you’ve actually done, so you pull receipts out of your clothes pockets
erica [24]

Based on the information given, the items that can be reflected in the account activity but that the person cannot account for include bank charges and transactions involving the use of ATMs.

From the complete information, it should be noted that there are bank charges that are charged by the banks.  In this case, the account may not reflect the spending that has actually been done.

Also, there are taxes that are charged on the goods that the person bought. Therefore, this will be reflected on the account activity and will give rise to a higher value than the amount that the person actually spends.

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3 0
2 years ago
In 1924, the famous novelist F. Scott Fitzgerald wrote an article for the Saturday Evening Post entitled ?How to live on $36,000
Maksim231197 [3]

Answer:

$4,267,059

Explanation:

to determine the equivalent amount of money between 1924 and 2008, we must divide the 2008 CPI by the 1924 CPI, and then multiply by $36,000:

= (2015 / 17) x $36,000 = 118.53 x $36,000 = $4,267,059

The consumer price index measures the weighted price of basket of goods . It is useful for calculating inflation and comparing how the purchasing value of the US dollar has decreased in time. Basically what this shows us, is that $1 in 1924 would purchase the same amount of goods as $118.53 in 2008.

8 0
3 years ago
Winnebagel Corporation currently sells 28,000 motor homes per year at $84,000 each and 7,000 luxury coaches per year at $135,000
MissTica

Answer:

$825,050,000

Explanation:

Calculation to determine the amount to use as the annual sales when evaluating this project

First step is to calculate the new product line sales

New product line sales =29,000*$24,700

New product line sales = $716,300,000

Second step is to calculate Increased sales of the motor home line

Increased sales=2,500*$84,000

Increased sales = $210,000,000

Third step is to calculate the loss in sales

Loss in sales=750*$135,000

Loss in sales= $101,250,000

Now let calculate the amount to use as the annual sales when evaluating this project

Net sales = $716,300,000 + $210,000,000 - $101,250,000

Net sales = $825,050,000

Therefore the amount to use as the annual sales when evaluating this project is $825,050,000

4 0
3 years ago
Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, p
lesya692 [45]

Answer and Explanation:

a. The preparation of the sales budget is prepared below:-

                                            <u>Sonic Inc.</u>

                                          <u>Sales budget</u>

<u>Particulars          </u>Unit  Sales<u>           Unit Selling price     Total Sales </u>

                              <u>Volume</u>

Model Rumble:    

East Region          12,000                 $60                        $720,000

West Region         14,000                 $60                        $840,000

Total                                                                                 $1,560,000

Model Thunder:    

East region             3,500               $90                           $315,000

West region            4,000               $90                           $360,000

Total                                                                                   $675,000

Total revenue from sales                                                  $2,235,000

To reach the total revenue from sales we simply added the total of model rumble with a total of model thunder.

b. The Preparation of the production budget is shown below:-

                                               <u>Sonic Inc.</u>

                                          <u>Production budget</u>

<u>Particulars </u>                    Units Model            Units Model

                                         <u> Rumble</u>                    <u>Thunder </u>

Expected units to be

sold                                       26,000                    7,500

                                     (12,000 + 14,000)      (3,500 + 4,000)

Add: Desired ending

inventory                                500                             250

Total units required               26,500                       7,750

Less: Beginning inventory      750                            300

Total units to be produced    25,750                     7,450

So, to reach at total units to be produced we simply deduct the beginning inventory from total units required.

7 0
3 years ago
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