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lora16 [44]
4 years ago
6

To help them estimate the company's cost of capital, Smithco has hired you as a consultant. You have been provided with the foll

owing data: D1 = $1.45; P0 = $22.50; and gL = 6.50% (constant). Based on the dividend growth approach, what is the cost of common from reinvested earnings?a. 11.10%b. 11.68%c. 12.30%d. 12.94%e. 13.59%
Business
1 answer:
Zarrin [17]4 years ago
3 0

Answer:

Option (D) is correct.

Explanation:

Cost of common stock:

= (Expected dividend at the end of Year 1 ÷ Price of stock) + Growth rate.

= (1.45 ÷ 22.50) + 0.065

= 0.0644 + 0.065

= 0.1294 i.e., 12.94%

Conclusion:-

Cost of common stock = 12.94%

Note:-

D1 = Expected dividend at the end of Year 1,

P0 = Current price of common stock, and

gL = Growth level i.e., growth rate in dividend.

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Consider a bank counter with two employees serving the customers. Deposit takes 5 minutes, cash withdraw takes 6 minutes, and el
Pavel [41]

Answer:

75%

Explanation:

As we know that

Utilization of the counter is

= Required time ÷ Capacity in terms of minutes per hour

where,

Required time is

= 5 minutes × 10 deposit  transactions + 6 minutes ×  5 withdraw transactions + 10 minutes × 1 electronic transfer

= 50 minutes + 30 minutes + 10 minutes

= 90 minutes

And, the capacity is

= 60 × 2

= 120 minutes

So, the utilization is

= 90 minutes ÷ 120 minutes

= 75%

4 0
3 years ago
Jake is hired by Toix Inc., an online retail store, to head its delivery department. His duties include overseeing the work of t
NNADVOKAT [17]

Answer: Jake's job relates to management

Explanation:

Management encompasses many things, which includes over seeing of the day to day activities of the business as it concerns the relevant objectives of the business as a whole

8 0
3 years ago
Waupaca Company establishes a $400 petty cash fund on September 9. On September 30, the fund shows $122 in cash along with recei
Lemur [1.5K]

Answer and Explanation:

The Journal entry is shown below:-

September 9

Petty cash fund Dr, $400

     To Cash $400

(Being establishment of petty cash fund is recorded)

Here we debited the petty cash fund as assets is increasing while we credited the cash is decreasing.

September 30

Merchandise Inventory Dr, $51

Postage expense Dr, $73

Cash Short and over Dr, $13

Miscellaneous Dr, $141

      To Petty Cash $278

(Being reimburse of petty cash find is recorded)

Here we debited the merchandise Inventory, postage expense, cash short and over and miscellaneous as it is expenses while we credited the petty cash as is reimbursed.

October 1

Petty cash fund Dr, $60

($460 - $400)

     To Cash $60

(Being increase in petty cash fund is recorded)

Here we debited the petty cash fund as assets is increasing while we credited the cash is decreasing.

6 0
4 years ago
Sumitomo Bank's risk manager has estimated that its DEAR of two of its major assets in its trading portfolio, foreign exchange a
Andre45 [30]

Answer:

-$380,789

Explanation:

Dear Portfolio = [(1,50,000)2 + (2,50,000)2 + 2(0.8)(1,50,000) ( 2,50,000)]0.5

= [$22500000000 + $62500000000 + $60000000000]0.5

= ($145000000000)0.5

= $380,789

4 0
3 years ago
Calculate the present value of $4,000 received five years from today if your investments pay (Do not round intermediate calculat
Elanso [62]

Answer:

A = $2,989.30

B = $2,722.33

C = $2,483.68

D = $2,455.65

E = $2,441.08

Explanation:

Given:

Future value (A) = $4,000

Present value (P) = ?

Number of Year (N) = 5.

A. R = 6% = 0.06

P=\frac{A}{(1+R/100)^N}\\P=\frac{4000}{(1+0.06)^5}\\P=\frac{4000}{(1.06)^5}\\\\P=\frac{4000}{(1.06)^5}\\P=\frac{4000}{1.33822558}\\\\P=2,989.032

B. R = 8% = 0.08

P=\frac{A}{(1+R/100)^N}\\P=\frac{4000}{(1+0.08)^5}\\P=\frac{4000}{(1.08)^5}\\\\P=\frac{4000}{1.46932808}\\\\P=2,722.3327

C. R = 10% = 0.1

P=\frac{A}{(1+R/100)^N}\\P=\frac{4000}{(1+0.1)^5}\\P=\frac{4000}{(1.1)^5}\\\\P=\frac{4000}{1.61051}\\\\P=2,483.6852

D. R= 10/2 = 5% N=5*2 = 10

P=\frac{A}{(1+R/100)^N}\\P=\frac{4000}{(1+0.05)^{10}}\\P=\frac{4000}{(1.05)^{10}}\\\\P=\frac{4000}{1.62889463}\\\\P=2,455.6530

E. R = 10/4 = 2.5% N = 5*4 = 20

P=\frac{A}{(1+R/100)^N}\\P=\frac{4000}{(1+0.025)^{20}}\\P=\frac{4000}{(1.025)^{20}}\\\\P=\frac{4000}{1.63861644}\\\\P=2,441.08377

3 0
4 years ago
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