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galben [10]
3 years ago
14

Hot Wings, Inc., has an odd dividend policy. The company has just paid a dividend of $8.50 per share and has announced that it w

ill increase the dividend by $6.50 per share for each of the next four years, and then never pay another dividend. Required: If you require a return of 16 percent on the company’s stock, how much will you pay for a share today
Business
1 answer:
Vadim26 [7]3 years ago
3 0

Answer:

The correct answer is $65.90 (approx.)

Explanation:

According to the scenario, computation of the given data are as follows:

Dividend paid = $8.50

Increase dividend = $6.50 per year

Require return = 16%

We can calculate the current share price by using following method:

=[($8.5 + $6.5) ÷ (1 + 16%)^1] + [($8.5 + $6.5 + $6.5) ÷ ( 1 + 16%)^2] +[($8.5 + $6.5 + $6.5 + $6.5) ÷ (1+16%)^3] + [($8.5 + $6.5+ $6.5 + $6.5 + $6.5) ÷ (1+16%)^4

= $15 ÷ 1.16 + $21.5 ÷ 1.16^2 + 28 ÷ 1.16^3 + 34.5 ÷ 1.16^4

= $65.90 (approx.)

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5 0
3 years ago
Read 2 more answers
Piedmont Company segments its business into two regions-North and South. The company prepared the contribution format segmented
Oduvanchick [21]

Answer:

The Dollar sales break even for the company is $568750, for the north region is $320000 and for the south region is $80000.

Explanation:

1. for the company:

cont margin ration = contribution/sale

                               = 240000/750000

                               = 0.32

fixed cost = 182000

dollar sales break even = fixed cost/cont margin ratio

                                       = 182000/0.32

                                       = $568750

2.  for the north region:

cont margin ration = contribution/sale

                               = 120000/600000

                               = 0.20

fixed cost = 64000

dollar sales break even = fixed cost/cont margin ratio

                                       = 64000/0.20

                                       = $320000

3. for the south region:

cont margin ration = contribution/sale

                               = 120000/150000

                               = 0.80

fixed cost = 64000

dollar sales break even = fixed cost/cont margin ratio

                                       = 64000/0.80

                                       = $80000

Therefore, The Dollar sales break even for the company is $568750, for the north region is $320000 and for the south region is $80000.

3 0
3 years ago
Carpet Woes. Beau went shopping at ABC Carpet. He saw some carpet he liked but could not make up his mind. The manager at ABC Ca
ella [17]

Answer: The court will apply the predominant-purpose test to determine whether the predominant purpose of the contract was the sale of goods in which case the UCC would apply.

Explanation:

Based on the information given in the question, we should note that the court will apply the predominant-purpose test to determine whether the predominant purpose of the contract was the sale of goods in which case the UCC would apply.

We should note that under a predominant purpose test, it will apply when the transaction involved is Mena for goods sales and not for the service sales.

4 0
2 years ago
A posthypnotic suggestion is made ________ a hypnosis session and intended to be carried out in the future when the subject is _
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7 0
3 years ago
Problem 2 (9 points) The following information was taken from the income statement and balance sheet of The Perryman Company for
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Answer and Explanation:

The computation is shown below;

The net profit margin is

= Net income ÷ sales revenue

= $184,000 ÷ $574,000

= 32%

The asset turnover is

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= $574,000 ÷ ($2,142,000 + $1,998,000)  ÷ 2

= $574,000 ÷ $2,070,000

= 0.28 times

c. The return on assets is

= Net income ÷ average of assets

= $184,000 ÷ $2,070,000

= 0.089

= 8.89%

3 0
3 years ago
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