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
Bezzdna [24]
2 years ago
10

Excelor stock is expected to pay $3.00 per share as its next annual dividend. The firm has a policy of increasing the dividend b

y 11.0 percent annually. The stock has a market price of $13.65 and a beta of 2.8. The market risk premium is 8.56 percent and the risk-free rate is 4.90 percent. What is the cost of equity?
Business
1 answer:
andrew-mc [135]2 years ago
3 0

Answer:

30.92%

Explanation:

You find the answer by calculating the cost of equity using two methods; Dividend discount model and CAPM

<u>Dividend discount model;</u>

cost of equity; r = (D1/P0) +g

whereby, D1 = next year's dividend = 3.00

P0= current price = 13.65

g = dividend growth rate = 11% or 0.11 as a decimal

r = (3/13.65) + 0.11

r = 0.2198 + 0.11

r= 0.3298 or 32.98%

<u>Using CAPM;</u>

r = risk free + beta (Market risk premium)

r = 0.049 + (2.8 * 0.0856)

r = 0.049 + 0.2397

r = 0.2887 or 28.87%

Next, find the average of the two cost of equities;

=(32.98% + 28.87% )/2

= 30.92%

You might be interested in
A retail store has three departments, S, T, and U, and does general advertising that benefits all departments. Advertising expen
Andrew [12]

Answer: $22,500

Explanation:

First calculate the rate of allocation based on sales to determine how much of Department T's sales should be attributed to Advertising.

The Rate of Allocation based on Sales = Advertising Expense/Total sales

= 50,000/475,000

= 0.105263

= 10.5263%

This 10.5% can then be used to find out how much of Advertising to apportion to Department T based on department sales,

= Department sales * Allocation rate

= 213,750 * 10.5263%

= $22,500

$22,500 should be allocated to Department T.

8 0
3 years ago
In which workplace are workers least likely to be injured by heavy equipment? a greenhouse a slaughterhouse a farm a quarry
Norma-Jean [14]
The answer is green house.
6 0
2 years ago
Read 2 more answers
A random sample of 12 lunch orders at noodles and company showed a mean bill of $12.99 with a standard deviation of $4.6. find t
kow [346]
12.99 + 4.6 = 17.59 / 98
6 0
3 years ago
Compared with a career , a job ?
Margaret [11]
A job is just a short term thing to get cash and build up experience . a career is a long term pursuit of lifelong ambition . a career you enjoy the rest of your life
5 0
3 years ago
Read 2 more answers
Maxim Corp. has provided the following information about one of its products: Date Transaction Number of Units Cost per Unit 1/1
Setler [38]

Answer:

Cost of goods sold as per average cost method = $92,458.5

Explanation:

As for the information provided as follows:

Opening Inventory             265 units     @         $153 each      = $40,545

Purchase                             465 units     @         $173 each      = $80,445

Purchase                             165  units     @         $213 each      = $35,145

Total data                            895 units                                        = $156,135

Average cost per unit = $156,135/895 = $174.45

In average cost method simple average is performed, whereas in weighted average weights are assigned.

Sale is of 530 units

Cost of goods sold as per average cost method = $174.45 \times 530 = $92,458.5  

7 0
2 years ago
Other questions:
  • Mark agrees to buy dale's one-half-ton truck so that he can pull his trailer. both mark and dale believe that the truck is large
    5·2 answers
  • Applewood, Inc. has a contract with Marco's Electronics to sell Marco's 500 car audio systems at a price of $100 each. Applewood
    7·1 answer
  • Workers are responsible for the production of goods in a business,
    9·1 answer
  • Webster and Moore paid $148,000, in cash, for equipment three years ago. At the beginning of last year, the company spent $21,00
    8·1 answer
  • In a national survey on substancein a national survey on substance abuse commaabuse, modifying 66.4 % with underline66.4% of res
    11·1 answer
  • Businesses use productivity suites in order to ________. a. Be on the cutting edge of technology b. Justify spending money on ca
    5·1 answer
  • Human beings are complex, and few, if any, simple and universal principles explain organizational behavior. Nevertheless, it doe
    11·1 answer
  • The Snow Corporation issues 14,000 shares of $54 par value preferred stock for cash at $68 per share. The entry to record the tr
    11·1 answer
  • The purpose of the Six Sigma method is to: Select one: a. Find and remove causes of mistakes b. Reduce variability in products a
    14·1 answer
  • The shona of zimbabwe organized to resist european imperialism under the leadership of?
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!