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3 years ago

What is the expected return if a firm has a payout ratio of 0.4, a return on equity of 25%, and a dividend yield of 15%

Business

1 answer:

marusya05 [52]3 years ago

3 0

Answer:

The expected return on stock is 30%

Explanation:

Growth rate = Return on Equity * Retention ratio

Growth rate = Return on Equity * (1- Payout ratio)

Growth rate = 25% * (1 - 0.40)

Growth rate = 0.25 * 0.60

Growth rate = 0.15

Growth rate = 15%

Hence, Expected return = Dividend return + Growth rate

Expected return = 15% + 15%

Expected return = 30%

Therefore, the expected return on stock is 30%

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3 years ago

Negative criticism is generally

riadik2000 [5.3K]

Answer:

The answer is A.

Hope I helped! If not I apologize.

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4 years ago

In regards to Social Security benefits:

olga_2 [115]

Answer: c. Tax-free interest income must be included in the formula used to determine if Social Security is included in taxable income.

Explanation:

The portion of Social Security benefits that is taxed depends on how much Income the person has.

For instance, a person is charged up to 50 percent if their income is $25,000 to $34,000 for an individual.

So now how do we calculate the 'income' on which the taxation is based.

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From the above we can see that option C is therfore correct.

6 0

3 years ago

Suppose that you have the option to buy the car with a 3 year car loan or lease the car during the same period of time. The 3 ye

Len [333]

Missing Question Data:

The question was missing the total amount of loan taken. I have found the question online and the missing data is added below.

Explanation:

DATA:

Car Loan = $15000

Interest Rate (annual) = 7% = 0.07

Interest Rate (monthly) = 0.07/12 = 0.00583

Loan Life = 3 years

Period (monthly) = 3*12 = 36

Investment Rate (annual) = 4% = 0.04

Investment Rate (monthly) = 0.04/12 = 0.00333

Salvage value after 3 years (PV of Salvage Value) = $5000

Lease Down Payment = $3000

Lease Monthly Payment = $350

<h3>First, we consider the option of Buying on Loan</h3>

Car Loan - Salvage Value(PV) = 15000-5000

Car Loan - Salvage Value(PV) = $10000

<h3>For the option of Leasing the Car</h3>

Sum of monthly lease payments for the total period will be,

Sum of Installments (FV) = 350 * 12 = $12600

We know that,

$PV\;=\;\frac{FV}{(1\;+\;r)^{n}}\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;(here\;n\;=\;4\%\;=\;0.00333)$

Sum of Installments (PV) = $\frac{12600}{(1\;+\;0.00333)^{36}}$

Sum of Installments (PV) = $11178.76

Total Lease Payment = Down Payment + Sum of Installments (PV)

Total Lease Payment = $3000 + $ 11178.76

Total Lease Payment = $14178.76

As we can see that total investment for Loan option is lower than that of Lease option, hence taking Loan is the best choice.

3 0

3 years ago