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madreJ [45]
4 years ago
12

Asonia Co. will pay a dividend of $3.90, $8.05, $10.90, and $12.65 per share for each of the next four years, respectively. The

company will then close its doors. If investors require a return of 11 percent on the company's stock, what is the stock price
Business
2 answers:
Dvinal [7]4 years ago
8 0

Answer:

Stock price today $26.34

Explanation:

The stock price today is the sum of the present value of the future cash flows(dividends) payable by the stock to investors using the 11% reuired rate of return as the discount rate:

Years           Cash flows       Discount factor                      Present values

1                       $3.90                1/(1+11%)^1=0.900900901        $3.51

2                      $8.05                1/(1+11%)^2=0.811622433          $6.53

3                       $10.90                1/(1+11%)^3=0.731191381           $7.97

4                       $12.65                  1/(1+11%)^4=0.658730974      $8.33

Total present values =$3.51+$6.53+$7.97+$8.33=$26.34

loris [4]4 years ago
8 0

Answer:

Price of stock = $57.26

Explanation:

<em>According to the dividend valuation model , the current price of a stock is the present value of the expected future dividends discounted at the required rate of return.</em>

So we will discount the steams of dividend using the required rate of 11% as follows:

Year Present Value(PV)

1 $3.90 × 1.11^(-1) = 1.486  

2 $8.05× 1.11^(-2) = 1.322

3 $10.90× 1.11^(-3) = 1.2064

Year 4 and beyond

<em>This is annuity of 12.65 for four years. So the steams of constant amount would be discounted as follows:</em>

PV = A × (1- (1+r)^(-n) )/r

  A- 12.65, r - 0.11, n - 4

PV = 12.65 × (1- 1.11^(-4))/0.11 =  39.24593797

Total PV=  1.486 + 1.322 + 1.2064 + 39.24=  $57.26

Price of stock =  $57.26

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Answer:

1) Debit Bank $11787069 Debit bond discount $912931 ; Credit Bond $12700000

2) Debit Interest expense $751293 ; Credit Bank $660,000 Credit Discount on Bond payable $91293

3 )Debit interest expense $ 751293 ; Credit bank 660000, Credit discount on bond payable $91293

b)Interest expense = $1502586

c)It is because a financial crisis might have happened prior to issuing the bond and the company still went ahead with issuing even though the rate has changed.

Explanation:

interest expense = 12000000 * 0.11 * 6/12=$660000

discount on bond payable = $912931 /5 = 182586 /2= 91293

Interest expense = $751293 * 2 = $1502586

7 0
3 years ago
Sweet Dreams sells 15,000 pillows per year for $25 per unit. Variable cost per unit is $14. Sweet Dreams wants to improve custom
Radda [10]

Answer:  The answer is $27.25

Explanation:

Let x be the price Sweet dreams will charge to earn the profit of $75,000

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Now applying the equation,

 20,000x - (20,000*19) - 90,000 = $75000

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therefore, x = $27.25

So, Sweet Dreams will charge $27.25 to earn the same profit it is earning now i.e. $75000 per year.

4 0
3 years ago
Which is an example of an automatic stabilizer? As real GDP decreases, income tax revenues: 
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Answer:

The correct answer is B. Decrease and transfer payments increase.

Explanation:

Automatic stabilizers soften cyclic fluctuations through their effect on aggregate demand. Indeed, when the economy is in a contractive or recessive phase, the negative or very reduced economic growth generates a decrease in fiscal revenues while higher unemployment increases public expenditures. Consequently, private sector disposable income decreases less than GDP does, thus limiting the contractual effect on aggregate demand, growth and employment. Therefore, the budget balance worsens in this phase by stimulating the economy and facilitating economic recovery. In the opposite sense, in times of expansion, automatic stabilizers generate higher public revenues and lower spending, which allows to increase the public surplus - or reduce the deficit - avoiding excessive expansion that could have negative effects on cycle volatility and price stability.

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3 years ago
The general willingness of consumers to purchase a product at various prices is __________.
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Demand.

If you found this especially helpful, I'd appreciate if you'd vote me Brainliest for your answer. I want to be able to assist more users one-on-one, as well as to move up in rank! :)
4 0
3 years ago
The best way to select a career is to research which one makes the most money. Please select the best answer from the choices pr
IgorC [24]

Answer:

FALSE

Explanation:

below are some important tips or guidelines that you should follow to choose the right career and be happy for the rest of your life.

<u><em>Know Your Strengths </em></u>

Every one of us has some strengths – and some weaknesses. The point is to find out what you are really good at. Are you good at telling stories? Do you find it easy to coach other writers? Do you love teaching students? There must be something that you feel passionate about and are good at doing. You need to find out what those skills and strengths are.

Create a list of skills that you have, and then pick the strongest skills from that list. Consult your friends or family for an outer perspective. If you play by your strengths, you’ll enjoy a great professional life.

<u><em>Discover Your Personality Type </em></u>

You might have heard about Myers-Briggs. It’s an introspective self-report questionnaire which helps you find out what type of personality you have. Different persons have different types of personalities; someone could be an introvert and someone else could be an extrovert. By knowing your personality type, you’ll be able to find out what type of work environment will suit you best.

<u><em>Take a Career Test </em></u>

If you are confused deciding which career is right for you, you can also go for a career test. Typically, a career test presents you with a set of questions which you need to answer in the given time-frame. A career test is aimed at assessing your skills and strengths and then suggest a career that is a good match. Once you have finished answering all the questions, you’ll be provided with 2-3 career options that suit you best and promise a satisfying life.

On the internet, you’ll find a number of career tests that you can complete within a few minutes. Many of them are free.

<u><em>Seek Advice from Others </em></u>

No matter where you live, you’ll always have people who are already employed, expert in a particular field or have more professional experience. Feel free to get in touch with these people and talk about your aspirations. Gather information about different occupations and industries. Ask them for advice that you can use for choosing a career that’s best for you.

<u><em>Work as an Intern </em></u>

Internships provide you with an excellent opportunity to lay the foundation of your career. The experience of actually working in the real world is something that you should never ignore. Working as an intern helps you find out how being in a particular job feels like, whether the work environment is up to your taste and how you get along with people in the workplace.

Internships are also highly recommended for building connections with professionals and gaining work experience that can add extra weight to a resume. An internship can be either paid or unpaid.

5 0
4 years ago
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