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Katyanochek1 [597]
3 years ago
7

Best Value Outlet recently announced that it intends to pay dividends of $0.40, $0.60, $0.75, and $1.00 per share over the next

four years, respectively. After that, the plan is to increase the dividend by 3.5 percent annually. What is the current value of this stock if the applicable discount rate is 13.5 percent?
A. $6.44
B. $7.83
C. $8.17
D. $9.55
E. $13.10
Business
1 answer:
Umnica [9.8K]3 years ago
4 0

Answer:

correct option C

Explanation:

Give data:

next four year dividend - $0.40,$0.60, $0.75 and $1.00

interest rate - 3.5%

Year    Particulars  Amount  [email protected]%       PV

 1        Dividend      0.4            0.881             = 0.4 *0.881 = $0.3524

 2      Dividend      0.60          0.7763            = 0.60 *0.7763 = $ 0.4658

 3      Dividend      0.75           0.6839           = 0.5129

 

 4      Dividend      1.00          0.6029             = 0.6026

 4      Price            $10.350       0.6026          = 6.2367

current value  = (0.3524 + 0.4658+0.5129+0.6026+6.2367) = $8.17

[email protected]% for dividend 0.40

= \frac{1}{(1+13.5\%)^{year\ 1}}

                                                    = \frac{1}{(1+13.5\%)^{1}} = 0.881

 

[email protected]% for dividend 0.60

= \frac{1}{(1+13.5\%)^{year\ 2}}

                                                  = \frac{1}{(1+13.5\%)^{2}} = 0.0.7763

Price is calcualted as

= \frac{year\ 4*1.035}{13.5\% - 3.5\%}

=\frac{4*1.035}{13.5\% -3.5\%}

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3) Compute the annual allowable depreciation using the straight line method for a machine that costs $86,000 to purchase and $7,
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7 0
3 years ago
List the steps of the accounting cycle in their proper order.
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Answer:

The accounting cycle is all about managing,updating and reporting on the firm's accounts.

Explanation:

The accounting cycle can be listed in the following nine steps as:

  • Step 1: analyzing transactions  as sales, purchase,etc
  • Step 2: All the transactions need to be recorded
  • Step 3: All the information should be transferred from journal to the ledger
  • Step 4: An unadjusted trial balance should be formulated
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Answer and Explanation:

According to the scenario, computation of the given data are as follow:-  

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= 150%

2. We have a need the value of overhead applied and overhead incurred, to calculate the value of over applied and under applied overhead.

Overhead Applied = (Purchase Of Direct Material + Opening Value of Direct Material - Closing Value of Direct Material) × Predetermined Overhead Rate

= ($139,000 + $27,000 - $13,000) × 150 ÷ 100

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Overhead applied is more than overhead incurred, so this situation is called over applied overhead.

3. Cost of Goods Manufactured for the Year

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Less-closing stock of raw material 13,000

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Add-Opening Work in Progress 46,000

Less-closing Work in Progress 36,000

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Less-finished goods closing stock 56,000

Cost of goods sold 492,500

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