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Umnica [9.8K]
3 years ago
12

Find both the arithmetic growth rate and the geometric growth rate of the dividends for Custer's Ice Cream Shoppes.

Business
1 answer:
Katen [24]3 years ago
4 0

Answer:

Arithmetic Growth rate is about 19.89%

Geometric Growth rate is about 23.44%  

Explanation:

Dividend Arithmetic Growth rate is calculated as follows

Step 1:

Find the growth rate of each year

Step 2:

Take its sum

Step 3:

Make an average by dividing the sum of all growths by Number of years in  growth.

Dividend Arithmetic Growth rate is calculated as follows

Step 1:

Find the growth rate of each year

Step 2:

Take sum of all positive growth rates because geometric mean does not include the negative values.

Step 3: Multiply every growth and take the square root of the resultant product of these growths.

A MS Excel File is attached for the working. please find it.

Download xlsx
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The total amount of taxes that the company will pay will be calculated as under -

Total taxes paid = (Taxes on income) + (Taxes on dividends)

Total taxes paid = ($ 9.50 X 39%) + ($ 4 X 10%)

Total taxes paid = $ 3.705 + $ 0.4 = $ 4.105 or $ 4.11

5 0
3 years ago
Nancy would like to double the money in her retirement account in five years. According to the rule of 70, what rate of interest
frutty [35]

Answer:

70/annual percentage

70/5=14

Explanation:

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3 years ago
What is meant by the term design mix -Business
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Where its triangle which takes into account a basic design like economic structure etc....
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B2B co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is
Travka [436]

Answer:

a. 5.85 years

b. 17.5%

Explanation:

a. For the computation of payback period first we need to find out the annual cash flow which is shown below:-

Annual Cash Inflow = Sales - Material - Selling and Administrative Expenses - Income Tax

= $75,000 - $40,000 - $7,500 - $7,000

= $20,500

Payback period = Initial investment ÷ Annual cash flow

= $120,000 ÷ $20,500

= 5.85 years

b. The computation of the accounting rate of return is shown below:-

accounting rate of return = Net income ÷ Average investment

= $10,500 ÷ ($120,000 ÷ 2)

= $10,500 ÷ $60,000

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7 0
3 years ago
The town of Millbridge has just agreed to pay a pension for the town clerk. The pension will be $40,000 per year for the next 20
Mekhanik [1.2K]

The amount that must be put aside now is $458,796.85.

<h3>How much should be put aside now?</h3>

The first step is to determine the future value of the annuity:

Future value = yearly payment x annuity factor

Annuity factor = {[(1+r)^n] - 1} / r

Where:

  • r = interest rate = 6%
  • n = number of years = 20

$40,000 x [(1.06^20) - 1] / 0.06 = $1,471,423.65

Now, determine the present value of this amount:  $1,471,423.65 / (1.06^20) =$458,796.85

To learn more about present value, please check: brainly.com/question/26537392

4 0
2 years ago
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