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Pie
3 years ago
12

Credenza Industries is expected to pay a dividend of $ 1.25 at the end of the coming year. It is expected to sell for $ 70 at th

e end of the year. If its equity cost of capital is 9​%, what is the expected capital gain from the sale of this stock at the end of the coming​ year?
Business
1 answer:
Setler [38]3 years ago
6 0

Answer:

$4.64

Explanation:

The total gains for a stock can be broadly classified as both capital gains and dividend gains The capital gain depends on the price of market of the stock prevailing at the time the stock is purchased and the time of the stock sales. For a given firm, dividend gain depends on the dividend policy  

From the question given, let us analyze the following,

the expected capital gain value calculated from the sale of the given stock is   The current stock value is given by:

(price of the stock after a year + the expected dividend) / capital equity cost

($70 + $1.25) / (1+9%)

= $71.25/1.09 = 65.36  

Then,

The capital gain expected from the sale of the stock is given by:

 Expected selling price after a year -the stock current value

 $70 - $65.36

= $4.64

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You have the following information for Crane Company for the month ended October 31, 2022. Crane uses a periodic method for inve
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Answer:

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1. Weighted average cost per unit = $25.032

2.                                       (1) LIFO         (2) FIFO          (3) Average-cost

Ending inventory                $1,580          $1,940                  $1,752

Cost of goods sold               6,180           5,820                   6,008

Sales revenue                    $9,150         $9,150                  $9,150

Gross profit                          2,970           3,330                    3,142

Gross profit rate                  32.5%          36.4%                   34.3%

Explanation:

a) Data and Calculations:

Date       Description              Units    Unit Cost or Selling Price         Total

Oct. 1      Beginning inventory  50            $22                           $1,100

Oct. 9     Purchase                   110              24                            2,640

Oct. 11    Sale                           (90)                                   $35               $3,150

Oct. 17    Purchase                   90              26                            2,340

Oct. 22  Sale                           (50)                                     40                2,000

Oct. 25  Purchase                   60              28                             1,680

Oct. 29  Sale                         (100)                                     40                4,000

Total                     310 (240) = 70                                             $7,760 $9,150

Weighted average cost per unit = $25.032

LIFO:

Ending inventory

= (50 * $22) + (20 * $24)

= $1,100 + $480

= $1,580

Cost of goods sold = $7,760 - $1,580 = $6,180

FIFO:l

Ending inventory:

= (60 * $28)  + (10 * $26)                  

= $1,680 + $260 = $1,940

Cost of goods sold = $7,760 - $1,940 = $5,820

Weighted-average costs:

Ending inventory = 70 * $25.032 = $1,752

Cost of goods sold = $7,760 = $1,752 = $6,008

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