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GenaCL600 [577]
3 years ago
5

The dividend growth model can be used to value the stock of firms that pay which type of dividends?I. Constant annual dividendII

. Annual dividend with a constant increasing rate of growthIII. Annual dividend with a constant decreasing rate of growthIV. Zero dividendPossible Answers:I onlyII onlyII and III onlyI, II, and III onlyI, II, III, and IV
Business
1 answer:
Fed [463]3 years ago
8 0

Answer:

II and III only

Explanation:

Since the Zero dividend is not possible in most of the scenarios.

The dividend growth model can be used to value the stock of firms that pay Annual dividend with a constant increasing rate of growth and the Annual dividend with a constant decreasing rate of growth.

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The annual planning process at Century Office Systems, Inc. had been arduous but produced a number of important marketing initia
sashaice [31]

Complete Question:

The annual planning process at Century Office Systems, Inc has been arduous but produced a number of important marketing initiatives for the next year. Most notable, company executives had decided to restructure its product-marketing team into two separate groups: (1) Corporate Office Systems and (2) Home Office Systems. Angela Blake was assigned responsibility for the Home Office Systems group, which would market the company’s word-processing hardware and software for home and office-at-home use for individuals. Her marketing plan, which included a sales forecast for next year of $25 million, was the result of a detailed market analysis and negotiations with individuals both inside and outside the company. Discussion with the sales director indicated that 40 percent of the company sales forces would be dedicated to selling products of the Home Office Systems group. Sales representatives would receive a 25 percent commission on sales of home office systems. Under the new organizational structure, the Home Office Systems group would be charged with 40 percent of the budgeted sales force expenditure. The sales director’s budget for salaries and fringe benefits of the sales force and non commission selling costs for both the Corporate and Home Office Systems groups of $7.5 million. The advertising and promotion budget contained three elements: trade magazine advertising, cooperative newspaper advertising with Century Office Systems dealers, and sales promotion materials including product brochures, technical manuals, catalogs, and point-of-purchase displays. Trade magazine ads and sales promotion materials were to be developed by the company’s advertising and public relations agency. Production and media placement costs were budgeted at $300,000. Cooperative advertising copy for both newspaper and radio use had budgeted production costs of $100,000. Century Office System Inc cooperative advertising allowance policy stated that the company would allocate 5 percent of company sales to dealers to promote its office systems. Dealers always used their complete cooperative advertising allowances. Meetings with manufacturing and operations personnel indicated that the direct costs of material and labor and direct factory overhead to produce the Home Office System product line represented 50 percent of sales. The accounting department would assign $600,000 in indirect manufacturing overhead (for example, depreciation, maintenance) to the product line and $300,000 for administrative overhead (clerical, telephone, office space, and so forth). Freight for the product line would average 8 percent of sales. Blake’s staff consisted of two product managers and a marketing assistant. Salaries and fringe benefits for Ms. Blake and her staff were $250,000 per year.

- At what level of dollar sales will the Home Office Systems group break even? Show Calculations

Answer:

Century Office Systems, Inc.

The level of dollar sales at which the Home Office Systems group will break even

= $23.87 million

Explanation:

a) Data and Calculations:

Sales forecast for next year = $25 million

Sales commission = 25% of sales = $6.25 million

Controllable expenses = 40%

Budgeted sales staff salaries and fringe benefits = $7.5 million

40% of staff salaries and fringe benefits = $3 million

Direct costs of material and labor and direct factory overhead = 50% of sales = $12.5 million

Budgeted Production and media placement costs = $300,000

Cooperative advertising copy for both newspaper and radio use had budgeted production costs of $100,000

Total advertising expense = $400,000

40% of advertising expense = ($400,000 - 5,000) * 40% = $158,000

Indirect manufacturing overhead (for example, depreciation, maintenance) = $600,000

Administrative overhead (clerical, telephone, office space, and so forth) = $300,000

Freight for the product line would average 8 percent of sales = $2 million

Home Office Systems:

Sales forecast =                            $25 million

Variable costs:

Direct costs of material and labor

 and direct factory overhead =   $12.5 million

Freight =                                        $2 million

Sales commission =                     $6.25 million

Total variable cost =                  $20.75 million

Contribution margin =                 $4.25 million

Contribution margin ratio = $4.25/$25 * 100 = 17%

Fixed expenses:

Advertising expense =                     $158,000

Staff salaries and fringe benefits = $3 million

Indirect manufacturing overhead = $600,000

Administrative overhead=               $300,000

Total fixed expenses =                    $4.058 million

Break-even sales dollars = Fixed expenses/Contribution margin margin

= $4.058 million/0.17

= $23.87 million

7 0
3 years ago
Graphical Designs is offering 20-20 preferred stock. The stock will pay an annual dividend of $20 with the first dividend paymen
Anastaziya [24]

Answer:

$ 152.35  

Explanation:

The stock price today can be computed by first determining the future value of the dividend in perpetuity ,then discounting that to present value.

Value in perpetuity=dividend/required return

dividend is $20

required return is 5.10%

value in perpetuity=$20/5.10%=$392.16

The price of the stock today is the present value of the value in perpetuity

PV=FV*(1+r)^-n

FV is $392.16

r is the required return of 5.10%

n is the number of years involved,which is 19,it is 19 because counting from today till the next next years would be first day of the next twenty years

price=$392*(1+5.10%)^-19=$ 152.35  

7 0
3 years ago
The return on total assets is computed by dividing net sales by average total assets. net income by ending total assets. net inc
Furkat [3]

Answer:

The return on total assets is computed by dividing net income by ending total assets

Explanation:

Here in this question, we are interested in knowing the mathematical formula that can be used to calculate the return on total assists

Mathematically, to calculate the return on total assets, two factors are needed.

These factors are;

i) Company’s net income

ii) Company’s assets total value

By using a specific period of time ( quarterly, annually etc); we can divide i by ii

So what we mean here is that;

Return on total assets = Net income of a company over a specific time period divided by the total asset value of the company over that specific period of time

3 0
3 years ago
A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 23%, while stock B has a standard
VARVARA [1.3K]

Answer:

0.304

Explanation:

The calculation has been done step by step in order to understand the final result. Note that (p) in the below working refers to the correlation coefficient between Stock A and B.

0.042 = (0.70^2)(0.23^2) + (0.30^2)(0.29^2) + 2(0.70)(0.30)(0.23)(0.29)p

0.042 = 0.0259 + 0.0076 + 0.028p

0.042 = 0.0335 + 0.028p

0.042 - 0.0335 = 0.028p

0.0085 = 0.028p

p = 0.0085 / 0.028

p = 0.304

4 0
3 years ago
If the market value of a firms assets is greater than the book true or false
olga55 [171]
The answer is true, not false.
3 0
3 years ago
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