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andreyandreev [35.5K]
3 years ago
10

A common stock pays an annual dividend per share of $1.80. The risk-free rate is 5 percentand the risk premium for this stock is

4 percent. If the annual dividend is expected to remain at$1.80 per share, what is the value of the stock?A. $17.78B. $20.00C. $40.00D. None of the above
Business
1 answer:
lilavasa [31]3 years ago
3 0

Answer:

B. $20.00

Explanation:

To calculate the intrinsic value of a paying dividends stock we use the Gordon Growth Model. PV = D1 / (k +g). In this case, the dividend is not going to experience any growth (g) therefore g=0 And D1 =D0 Which equals 1.8. K is the expected rate of return which is calculated adding the risk premium and risk- free rate. K=5% + 4%=9%.

PV = 1.8 / 0.09

PV = 20.00

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Jazz Corporation owns 50% of the Williams Corp. Stock. Williams distributed a $10,000 dividend to Jazz Corporation. Jazz Corp.'s
Elden [556K]

Answer:

$6,500

Explanation:

Calculation for the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp

Based on the information given we were told that the Jazz's Corporation owns part of Williams Corp. stock which is 50% in which Williams Corp. stock distributed the amount of $10,000 dividend to Jazz Corporation which means that Jazz Corporation share in Williams stock is higher than 20% and as well lower than 80% based on this Jazz Corp.'s will be entitled to dividend received deduction of 65% calculated as:

Dividends received deduction =$10,000 × 65%

Dividends received deduction=$6,500

Therefore the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp will be $6,500

7 0
3 years ago
Product A is normally sold for $9.60 per unit. A special price of $7.20 is offered for the export market. The variable productio
elixir [45]

Answer:

A. Reject (Alternative 1) $0.00

Accept (Alternative 2) $1.12

Differentials Effect on income (Alternative 2) $1.12

B. Accepted (Alternative 2)

Explanation:

a. Preparation of a differential analysis dated March 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order.

DIFFERENTIAL ANALYSIS

Reject (Alternative 1) or Accept (Alternative 2)

March 16

Reject Accept Differentials Effect on income

(Alternative 1) (Alternative 2) (Alternative 2)

Revenue per unit $0.00 $7.20 $7.20

Costs:

Variable manufacturing costs per unit

$0.00 -$5.00 -$5.00

Export tariff per unit

$0.00 -$1.08 -$1.08

($7.20*15%=$1.08)

Income (Loss) per unit $0.00 $1.12 $1.12

b. Based on the above differential analysis

the special order should be ACCEPTED (Alternative 2).

5 0
3 years ago
Information that is collected for the first time from original sources is called ________.
SpyIntel [72]
Information that is collected for the first time from original sources is called primary research.

Primary research is research you contact yourself. A few examples of ways to collect primary research are through surveys, focus groups and observations.  

Secondary research is information collected from other sources that once was primary research. Although they are complete opposite to get the most accurate research data it is best to use both primary research and secondary research in your market research. 
6 0
3 years ago
Which of the following is true about a "credit"? I. It is part of the double-entry procedure that keeps the accounting equation
kipiarov [429]

Answer:

III. I, II, III, and IV.

  • I. It is part of the double-entry procedure that keeps the accounting equation in balance.
  • II. It represents a decrease to assets.
  • III. It represents an increase to liabilities.
  • IV. It is on the right side of a T-account.

Explanation:

The debit-credit balance is necessary for maintaining the accounting equation in balance, i.e. all the debits must have a corresponding credit.

Asset accounts increase when they are debited and decrease when they are credited.

Liabilities accounts decrease when they are debited and increase when they are credited.

Debits are on the left side of a t-account and credits are on the right side.

3 0
3 years ago
Cullumber Manufacturing Company purchased 14600 switches to make 6300 units. The standard allows for 2 switches per unit. The co
earnstyle [38]

Answer:

d. $1,875 unfavorable

Explanation:

Direct material quantity variance is computed as;

= (AQ - SQ) × SP

AQ = Actual quantity = 6,300 units

SQ = Standard quantity = 14,200 / 2 = 7,300 units

SP = Standard price = $0.80

Direct material quantity variance

= (6,300 - 7,300) × 0.80

= -1,000 × $0.80

= -1,875 unfavorable

3 0
2 years ago
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