1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
blondinia [14]
3 years ago
12

Uber plans to sell shares of common stock to raise capital funds. They estimate that each share of common stock will sell for $1

81, but their investment bank will charge a 4% fee. The face value is $181 per share. Uber also plans to pay a dividend each year of 10% while maintaining an annual growth rate of 7% to keep their shareholders happy. What is Uber's cost of capital of this common stock?
Business
1 answer:
sergey [27]3 years ago
8 0

Answer:

18.11%

Explanation:

Data provided in the question:

Selling price = $181

Fees charged = 4% = 0.04

Face value = $181 per share

Dividend paid each year = 10% = 0.10

Annual growth rate = 7% = 0.07

Now,

Uber's cost of capital of this common stock

= [ D1 ÷ (Face value - D1)] + Growth rate

= [ ( $181 × 0.1) ÷ ($181 - 181 × 0.1)] + 0.07

= [ 18.1 ÷ 162.9 ] + 0.07

= 0.1811

or

= 0.1811 × 100% = 18.11%

You might be interested in
Suppose a stock had an initial price of $58 per share, paid a dividend of $1.90 per share during the year, and had an ending sha
posledela

Answer: Dividend yield is 3.3%

Capital gains yield is 17.24%

Explanation:

Dividend yield is given as the ratio of annual dividend per share and stock's price per share.

Dividend per share = $1.9

Share price = $58

Dividend yield = 1.9/58 = 0.033 or 3.3%

Capital gain yield is the appreciation in the price of a stock expressed as a percentage.

Capital gain yield = (current price – original price) / original price x 100

Current price = $68

Original price = $58

CGY = (68-58)/58 * 100 = (10/58)*100 = 17.24%

4 0
2 years ago
The number of years a person that age is expected to have left to live on average is known as?
aleksley [76]
Perhaps, life expectancy...  That may be your answer.

6 0
2 years ago
Read 2 more answers
Should Tangshan Mining company accept a new project if its maximum payback is 3.5 years and its initial after tax cost is​ $5,00
Firlakuza [10]

Answer:

Yes, Tangshan Mining company should accept the project.

Explanation:

Payback period is the number of years it takes for a project's expected cash inflows to recover the initial investment amount.

Tangshan company's required payback period = 3.5 years

<u>Year             CF                       Net CF</u>

0             -5,000,000        -5,000,000

1               1,800,000          -3,200,000

2              1,900,000          -1,300,000

3                700,000           -600,000

4               1,800,000            1,200,000

<em>Payback period = last year with -net CF +(absolute net CF that year /total CF the following year)</em>

Payback period = 3 + (600,000 / 1,800,000)

=3 + 0.33

= 3.33 years

Since 3.33 years is lower than the required payback period of 3.5 years, Tangshan Mining company should ACCEPT the new project; it will take less years to fully recover the initial amount investment.

5 0
2 years ago
Today companies such as Nike, Walmart and Apple are trying to stop certain harmful practices and prevent managers abroad from ad
Leni [432]

Answer:

where is the wuestion

Explanation:

3 0
3 years ago
A Quality Analyst wants to construct a sample mean chart for controlling a packaging process. He knows from past experience that
ZanzabumX [31]

On Monday and Tuesday, the process appears to be out of control.                                                                                                                                                

<u>Explanation</u>:

  • There are five days Monday, Tuesday,Wednesday, Thursday and Friday. Monday and Tuesday have weight up to 21. Wednesday weights up to 21.
  • Thursday and Friday weigh up to 20. Except for Monday and Tuesday, all the days have packaged up to the value of  21. So Monday and Tuesday are the days that appear to be out of control.
  • On checking the package for each day he came to know that Monday and Tuesday have process out of control.

       

                                                                                         

7 0
2 years ago
Other questions:
  • Boulder Furniture has bonds outstanding that mature in 15 years, have a 6 percent coupon, and pay interest annually. These bonds
    14·1 answer
  • Mirage Inc., a management consulting firm, plans to increase its profits by expanding its services to target new customers. It w
    15·1 answer
  • In the process of reconciling its bank statement for January, Maxi's Clothing's accountant compiles the following information:
    6·1 answer
  • Frosty Inc. has the following balances on December 31 prior to closing entries: Revenues $ 35,000 Retained Earnings, Jan. 1 10,0
    14·1 answer
  • The June 1 work in process inventory consisted of 5,000 units with $16,000 in materials cost and $12,000 in conversion cost. The
    14·1 answer
  • This year, FGH Partnership generated $600,000 ordinary business income. FGH has two equal partners: Triad LLC and Beta, an S cor
    15·1 answer
  • MC Qu. 98 At the beginning of the recent... At the beginning of the recent period, there were 1,470 units of product in a depart
    13·1 answer
  • The federal deficit fell from $1,300 billion in 2011 to $1,087 billion in 2012. How much of this change was due to
    12·1 answer
  • What are the company’s assets if the liabilities are $10,000 and the owner’s equity is $20,000?
    14·2 answers
  • In two paragraphs, using your own words, compare and contrast the responsibilities of a facilities manager with those of a gener
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!