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mihalych1998 [28]
3 years ago
14

Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expect

s earnings and dividends to grow at a rate of 22% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
Business
1 answer:
Ronch [10]3 years ago
4 0

This can be worked out as under:

rakhivasavada :

Required Rate of Return r(m) = r(f) + b r(p), where r(f) is the risk free rate and the r(p) is the risk premium and b is beta and therefore:

r(m) = 3.00 + 1.20 * 5.5 = 9.6%.

rakhivasavada :

Hence current price P(0),

= D1/(1+k) +D2/(1+k)^2 + D3/(1+k)^3 + D4/(1+k)^4 + P4/(1+k)^4

D1 = D0 * 1.25 = 1.25*1.25 = 1.25^2

D2 = 1.25D1 = 1.25^3

D3 = 1.25D2 = 1.25^4

D4 = 1.25D3 = 1.25^5

D5 = 1*D4 = 1.25^5 (g = 0, so (1+g) =1)

P4 = D5/k = 1.25^5/0.096

So, P(0)

= 1.25^2/1.096 +1.25^3/1.096^2 +1.25^4/1.096^3 +1.25^5/1.096^4 +1.25^5/(0.096*1.096^4)

= 29.05

rakhivasavada :

I am sure this would help...

rakhivasavada :

Rate this answer ONLY IF you are done with this and if this helps and satisfies you as this is the only way we get compensated for assisting you. You may use "CONTINUE CONVERSATION" to revert with additional queries if you have or if I have missed out on any aspect of your question.

Hope this helps...

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Waterway Company manufactures bowling balls through two processes: Molding and Packaging. In the Molding Department, the urethan
garik1379 [7]

Answer:

(a) unit accounted for transferred out $25,200 (b) Equivalent unit of production, Materials $27,720, conversion cost $26,208, (c) unit cost of production Unit materials cost $9, Unit conversion cost $8

Explanation:

No specific question was asked, I think the question to be asked are the following

Cost Data

$

Materials. 249,480

Labour. 67,536

Overhead. 142,128

----------------

Total. 459,144

-------------------

To prepare a schedule showing physical unit of production

$

Beginning work in process June 1. 0

Unit started into production. 27,720

--------------

Total. 27,720

Less: Ending work in process unit. 2,520

--------------

Unit accounted for transferred out. 25,200

----------------

To determine the equivalent unit of production

Materials. Conversion cost

$ $

Transferred out. 25,200. 25,200

Work in process( 2,520 × 100%) 2,520

(2,520 × 40%) 1,008

------------- ------------------

Total. 27,720. 26,208

----------------- --------------------

To compute the unit cost of Production

Unit materials cost = Total materials cost / Equivalent cost

= 249,480/ 27,720

= $9

Unit conversion cost = Labour + Overhead / Equivalent cost

67,536 + 142,128

= 209,664 / 26,208

= $8

3 0
3 years ago
Metlock Company has identified that the cost of a new computer will be $44000, but with the use of the new computer, net income
arlik [135]

Answer:

c

Explanation:

Cash payback period calculates how long it takes to recover the amount invested in a project from its cumulative cash flows.

Cash payback period = amount invested / cash flows

Cash flows = net income + depreciation = $5000 + $3000 = $8000

$44,000 / $8,000 = 5.5 years

8 0
2 years ago
All of the following are forms of cognitive bias except:_____.
Alecsey [184]

Answer:

Option C would be the correct answer.

Explanation:

Throughout objective reasoning, cognitive bias seems to be a weakness that has been triggered by that of the human brain's propensity to interpret knowledge through a prism of individual perspective including interests. The types of cognitive bias but for the remaining change.  

The types of cognitive bias are almost as follows:

  • Overconfidence bias
  • Confirmation bias
  • Halo effect
  • Anchoring bias

The latter considerations provided are not closely linked to the case provided. So, the answer above is the right one.

6 0
3 years ago
5. Ren Inc. has expected earnings before interest and taxes of $63,300, an unlevered cost of capital of 14.7 percent, and a comb
laila [671]

Answer:

$334,101.43

Explanation:

The computation of the value of this company is shown below:

Value of unlevered firm= [$63,300 × (1 - 23%)] ÷ 14.7%

= $331,571.43

And,

Value of this company = 331,571.43 + 23% of $11,000

= $331,571.43 + $2,530

= $334,101.43

As we know that value of the company is the mix o f levered firm and the unlevered firm according to that we done the calculations

5 0
3 years ago
Many states have language in their constitutions that requires the state to provide for an "adequate" level of k-12 education sp
Allushta [10]
This will only require tax from our parent or other's because, this is for level of K-12 so it will be tax from people like us. This is what I thought tho.
7 0
3 years ago
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