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MrMuchimi
3 years ago
15

You buy a share of The Ludwig Corporation stock for $21.40. You expect it to pay dividends of $1.07, $1.1449, and $1.2250 in Yea

rs 1, 2, and 3, respectively, and you expect to sell it at a price of $26.22 at the end of 3 years.
A. Calculate the growth rate in dividends.
B. Calculate the expected dividend yield .
C. Assuming the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to get the expected total rate of return. What is the stock
Business
1 answer:
pickupchik [31]3 years ago
8 0

Answer:

A. the growth rate in dividends = 7.00%

B. Expected dividend yield = 4.67%

C. Stock's xpected total rate of return = 11.67%

Explanation:

A. Calculate the growth rate in dividends

Current dividend growth rate = (Current year dividend - Previous year dividend) / Previous year dividend

Therefore,

Year 2 dividend growth rate = ($1.1449 - $1.07) / $1.07 = 0.0700, or 7.00%

Year 3 dividend growth rate = ($1.2250 - $1.1449) / $1.1449 = 0.0700, or 7.00%

This shows that;

Year 2 dividend growth rate = Year 3 dividend growth rate = 7.00%

B. Calculate the expected dividend yield

Dividend yield = Dividend per share / Market price per share

Therefore,

Expected dividend yield = Expected dividend per share in year 3 / Expected market price per share in year 3 = $1.2250 / $26.22 = 0.0467, or 4.67%

C. Assuming the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to get the expected total rate of return. What is the stock

Note: The complete statement is "What is this stock’s expected total rate of return?"

Stock's xpected total rate of return = Growth rate + Expected dividend yield in 3 = 7.00% + 4.67% = 11.67%.

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Lusk corporation produces and sells 20,000 units of product x each month. the selling price of product x is $30 per unit, and va
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From economics, we know that the formula for Profit is:

Profit = Income – Total Cost

Case 1: Continue producing and selling product x

income is calculated as:

Income = ($30 / unit) * (20, 000 units)

Income = $ 600, 000

Total cost is composed of both the fixed cost and variable cost:

Total cost = Variable cost + Fixed cost

Total cost = ($21 / unit) * (20, 000 units) + $250,000

Total cost = $670, 000

Therefore, the profit of producing and selling product x each month is:

Profit = $ 600, 000 - $670, 000

<span>Profit 1= - $70, 000        (decifit)</span>

 

Case 2: Discontinue producing and selling product x

Since there is no income but there is unavoidable fixed cost of $50,000, therefore:

<span>Profit 2 = - $50, 000       (deficit)</span>

 

The company’s overall net operating income would be the change in profit (deficit in this case):

Net operating income = Profit 2 – Profit 1

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<span>Therefore discontinuing product x would result in an increase in the overall net operating income by $20,000 per month.</span>

8 0
3 years ago
Oriole Company has a balance in its Accounts Payable control account of $8,170 on January 1, 2020. The subsidiary ledger contain
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Complete question:

Oriole Company has a balance in its Accounts Payable control account of $8,170 on January 1, 2020. The subsidiary ledger contains three accounts: Hale Company, balance $2,550; Janish Company, balance $1,580; and Valdez Company. During January, the following payable-related transactions occurred.

Purchases Payments Returns  

Hale Company $6,529 $5,972 $ -0-  

Janish Company   5,066   2,087 2,215  

Valdez Company   6,647   6,790   -0-

What is the January 1 balance in the Freeze Company subsidiary account?

What is the January 31 balance in the control account?

Balances in the subsidiary accounts Bixler $ Cuddyer $ Freeze$

Which January transaction would not be recorded in a special journal?

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What is the January 1 balance in the Freeze Company subsidiary account?

8,170 - 2,550 - 1,580 = 4040

What is the January 31 balance in the control account?

8,170 + 6,529 + 5,066 + 6,647 - 5,972 - 2,087 - 6,790 - 2,215 = 1,995

Compute the balances in the subsidiary accounts at the end of the month.  

Hale 2,550 + 6,529 - 5,972 = 3,107

Janish 1,580 + 5,066 - 2,087 - 2,215 = 2,344

Valdez 4040 + 6,647 - 6,790 = 3,897

Which January transaction would not be recorded in a special journal?

Returns Purchases Payments

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