1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
jeyben [28]
3 years ago
15

Kimona Company hired you as a consultant to help estimate its cost of common equity. You have obtained the following data: D0 =

$0.85; P0 = $20.00; and g = 5.00% (constant). The CEO thinks, however, that the stock price is temporarily depressed, and that it will soon rise to $40.00. Based on the DCF approach, by how much would the cost of common equity from retained earnings change if the stock price changes as the CEO expects?
Business
1 answer:
nlexa [21]3 years ago
4 0

Answer:

-2.23%

Explanation:

The formula to compute the cost of common equity under the DCF method is shown below:

= Current year dividend ÷ price + Growth rate

In first case,

The current dividend would be

= $0.85 + $0.85 × 5%

= $0.85 + $0.0425

= $0.8925

The other things would remain the same

So, the cost of common equity would be

= $0.8925 ÷ $20 + 5%

= 0.044625 + 0.05

= 9.46%

In second case,

The price would be $40

The other things would remain the same

So, the cost of common equity would be

= $0.8925 ÷ $40 + 5%

= 0.0223125 + 0.05

= 7.23%

The difference would be

= 7.23% - 9.46%

= -2.23%

You might be interested in
_______ is defined in marketing terms as the basic problem-solving benefits consumers are seeking.
omeli [17]
The term that is being referred to the description is CORE CUSTOMER VALUE. The core customer value is a marketing term that describes the fundamental benefits of problem solving that consumers are looking for. The customer value are classified into two and these are the perceived and the desired value.
7 0
4 years ago
Which Act is the amended from of the Consumer Credit Protection Act?
Andreyy89

the answer is c i hope this helps

mark brainliest


6 0
3 years ago
A corporation acquires new funds only when its securities are sold in the
Varvara68 [4.7K]
C so sorry I’m wrong
8 0
3 years ago
41 had investments in stock funds 91 had investments in bond funds 60 had investments in money market funds 47 had investments i
Evgesh-ka [11]

Answer:

The answer is "22 and 80"

Explanation:

The important part is to understand how the Venn diagram can assist you with your numbers.

You cannot draw this one, and you can create one as follows:

the 3 sorts of funding, then make your way back thru the list

this is the figure in the center - "22 had all 3 funds"

where the four dimensions meet. In the next three statements, you'll be able to:

Work out where 2 circles connect (remember all 22 of those circles are connected).

That's because the numerals have been already placed throughout the center zone.

bond & money market solenoid valves at a ratio of 36-22=14

36-22=14 as to where the corporate market and the term deposit intersect

47-22=25 as to where equities and bonds connect You can use the top 3 statements to work out all the values in a table.

(Set of) just one circle (circle)

for stock the number is 141-(22+14+25)=80

for the bond, the number is91-(22+14+25)=30

for the money market, the number is 60-(22+14+14)=10

(universal set) Lastly, get the number that goes into the rectangle.

\to 200-(80+30+10+25+14+14+22)=5

a) 22\\b) 80

7 0
3 years ago
Davis Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The follo
evablogger [386]

Answer:

$1,800

Explanation:

Calculation to determine the variable overhead efficiency variance

Using this formula

VOH Efficiency Variance = Budgeted VOH based on Actual - Budgeted VOH/Standard Qty

Let plug in the formula

VOH Efficiency Variance = ((16,000 * $1.80/hr) - ((5,000 * 3.00hrs/unit * $1.80/hr))

VOH Efficiency Variance = $(28,800.00 - $27,000.00)

VOH Efficiency Variance = $1.800

Therefore Using the four-variance approach, what is the variable overhead efficiency variance will be $1,800

8 0
3 years ago
Other questions:
  • Diamond enterprises is considering a project that will produce cash inflows of $41,650 a year for three years followed by $49,00
    13·1 answer
  • The first three activities of the human resource management (hrm) process are about ________
    5·1 answer
  • An implementation of which security principle ensures that secrets stay secret?
    5·1 answer
  • When Sewsavor developed a food delivery application, a majority of people started using and recommending the application. Howeve
    8·1 answer
  • Sales revenue$ 4,000Purchases of direct materials$ 400Direct labor$ 450Manufacturing overhead$ 620Operating expenses$ 650Beginni
    11·1 answer
  • What is the horizontal rule in a customer service aspect?
    13·1 answer
  • The rule of thumb that predicts that cpu capacity will double every two years is called ________.
    13·1 answer
  • You are US company, 500,000 BP (British Pound) payable to UK in one year. Answer in terms of US$. Information for Forward Contra
    15·1 answer
  • In the current year, Marnie rented her vacation home for 75 days, used it for personal reasons for 22 days, and left it vacant f
    11·1 answer
  • When microwaves were new, they typically cost over $300, were bulky and required extensive counter space, and had limited styles
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!