Simple teasing, offhand comments, and isolated incidents that are not very serious are not

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next three years, with the growth

Grace [21]

Answer:

current share price is $71.05

Explanation:

given data

grow at a rate = 20 percent

time = 3 year

growth rate falling off = 8 percent

dividend = $1.45

solution

we get here price of the stock in Year 3 that is 1 year before the constant dividend growth that is

P(3) = D(3) × (1 + g) ÷ (R - g) .............1

P(3) = D0 (1 + g1)³ × (1 + g2) ÷ (R - g)

P(3) = $\frac{1.45\times 1.20^3 \times 1.08}{0.11-0.08}$

P(3) = $90.206

and

then price of the stock today is present value of first three dividends + present value of the Year 3 stock price

so price of the stock today is

P(0) = $\frac{1.45(1.20) }{1.11} + \frac{1.45(1.20)^2}{1.11^2} +\frac{1.45(1.20)63}{1.11^3} +\frac{90.2016}{1.11^3}$

P(0) = $71.05

4 0

2 years ago

LA Diversified Inc. recently paid its annual dividend of $3. Dividends have consistently grown at a rate of 3.8%. The stock has

RSB [31]

Answer:

$51.22

Explanation:

For computing the intrinsic value, first we have to determine the current year dividend and expected rate of return which is shown below:

The computation of the next year dividend is shown below:

= $3 + $3 × 3.8%

= $3 + 0.114

= $3.114

And, the expected rate of return would be

= Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 2.4% + 0.88 × (10.9% - 2.4%)

= 2.4% + 0.88 × 8.5%

= 2.4% + 7.48%

= 9.88%

Now the intrinsic value would be

= Next year dividend ÷ (Required rate of return - growth rate)

= $3.114 ÷ (9.88% - 3.8%)

= $3.114 ÷ 6.08%

= $51.22

3 0

3 years ago

Production equipment costing $500,000 has been purchased by a contract manufacturing company to meet the specific needs of a cus

irina1246 [14]

Answer:

Short-cut IRR = 18.75%

The company has not reached their rate of return goal on this contract and investment.

Explanation:

a) Data and Calculations:

Cost of production equipment = $500,000

Qualified investment tax credit (ITC) = 10% = $50,000 ($500,000 * 10%)

Contract period = 4 years with 4 years extension on renewal

Income tax rate for the company = 40%

Expected after-tax rate of return = 12%

Expected before-tax rate of return = 30% (12%/40%)

Annual income generated by the equipment = $150,000 for 4 years

Salvage value at the end of 4 years = $200,000

Short-cut IRR = 100%, divided by the number of years * about 75-80%

= 100%/4 * 75%

= 18.75%

8 0

2 years ago

Based upon the following data, what is the cost of the land? Land purchase price $196,981 Broker's commission 18,718 Payment for

dexar [7]

Answer:

$219,084

Explanation:

The cost of the land to be recorded includes the purchase price of the land as well as other cost incurred in the process of making the land available for use.

Any amount received as a result of this purchase in form of rebates and discounts will be deducted from the cost.

Hence the cost of the land

= $196,981 + $18,718 + $3,885 - $500

= $219,084

8 0

2 years ago

Pharoah Industries collected $106,000 from customers in 2019. Of the amount collected, $24,200 was for services performed in 201

vodka [1.7K]

Answer:

A. $33,200

B. $35,000

Explanation:

A. Computation for 2018 cash-basis net income

2018 cash-basis net income = $106,000 - $73,800

2018 cash-basis net income= $33,200

Therefore 2018 cash-basis net income is $33,200

(b) Computation for 2018 accrual-basis net income

2018 accrual-basis net income = ($106,000 - $24,200 + $39,400) - ( $73,800 - $29,100 + $41,500))

2018 accrual-basis net income= $121,200 - $86,200

2018 accrual-basis net income= $35,000

Therefore 2018 accrual-basis net income is $35,000

3 0

2 years ago