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Ne4ueva [31]
3 years ago
5

Consider four different stocks, all of which have a required return of 14 percent and a most recent dividend of $3.50 per share.

Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 10 percent, 0 percent, and –6 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20 percent for the next two years and then maintain a constant 12 percent growth rate thereafter. What is the dividend yield for each of these four stocks? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) What is the expected capital gains yield for each of these four stocks? (Leave no cells blank - be certain to enter "0" wherever required. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Business
1 answer:
nlexa [21]3 years ago
6 0

Answer:

Stock W   3.64%

Stock X  14.00%

Stock Y 21.28%

Stock Z   1.56%

Explanation:

We calculate the horizon value for each one. This will provide us with their price and with that, we solve for dividends yield

Stock W - Horizon Value

 3.50 x 1.10            3.85

-----------------  =    -----------  = 96.25

  0.14 - 0.10           0.04

Dividend yield: 3.50 / 96.25 = 0.036363636 = 3.64%

Stock X: g= 0

3.5 / 0.14 =  25

3.5 / 25 = 0.14

Stock Y g = -0.06

3.50 x (1 - 0.06) / (0.14 - (-0.06)) = 16.45

Dividend yield 3.50 / 16.45 = 0,212765957 = 21.28%

Stock Z

\left[\begin{array}{ccc}#&Dividends&Discounted\\&3.5&\\1&4.2&3.68\\2&5.04&3.88\\2&5.6448&217.17\\&TOTAL&224.73\\\end{array}\right]

First we solve for the next two dividends:

next year 3.50 x (1 + 20%) = 4.2

second year 4.20 x (1 + 20%) = 5.04

Here we solve for the horizon value of the constant grow:

5.04 x 1.12 / (0.14 - 0.12) = 282.24

now, we solve for the Present value of each one and add them together.

Getting a value of $224.73

We now solve for dividend yield: 3.50 / 224.73 = 0,01557 = 1.56%

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The comparative statements of Carla Vista Co. are presented here.
Irina18 [472]

Answer:

Carla Vista Co.

(a) Earnings per share = $3.57

(b) Return on common stockholders’ equity = 34.31%

(c) Return on assets = 19.79%

(d) Current ratio = 1.82

(e) Accounts receivable turnover = Net Sales/Average Receivable = 16.18 times

(f) Average collection period = 365 Days /Average Receivable Turnover ratio = 22.56 days

(g) Inventory turnover = Cost of goods sold/Average Inventory = 8.68 times

(h) Days in inventory = 42.05 days

(i) Times interest earned = 3.46 times

(j) Asset turnover = 1.81

(k) Debt to assets ratio = Total Debt/Total Assets = 42.31%

(l) Free cash flow = Cash from Operations - Capital Expenditures = $116,000

Explanation:

a) Data and Calculations:

CARLA VISTA CO.

Income Statements

For the Years Ended December 31

                                                               2017          2016

Net sales                                          $1,897,540   $1,757,500

Cost of goods sold                            1,065,540     1,013,000

Gross profit                                          832,000       744,500

Selling and administrative expenses 507,000       486,000

Income from operations                     325,000      258,500

Other expenses and losses:

Interest expense                                   24,000        22,000

Income before income taxes              301,000      236,500

Income tax expense                             94,000        75,000

Net income                                      $ 207,000    $ 161,500

CARLA VISTA CO.

Balance Sheets

December 31

Assets                                                            2017           2016

Current assets

Cash                                                           $ 60,100     $ 64,200

Debt investments (short-term)                    74,000        50,000

Accounts receivable                                   124,800      109,800

Inventory                                                     128,000       117,500

Total current assets                                  386,900      341,500

Plant assets (net)                                      659,000     530,300

Total assets                                          $1,045,900    $871,800

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable                                 $ 167,000     $152,400

Income taxes payable                               45,500        44,000

Total current liabilities                             212,500      196,400

Bonds payable                                        230,000      210,000

Total liabilities                                         442,500     406,400

Stockholders’ equity

Common stock ($5 par)                        290,000     300,000

Retained earnings                                  313,400      165,400

Total stockholders’ equity                    603,400     465,400

Total liabilities and

  stockholders’ equity                     $1,045,900    $871,800

Net cash provided by operating activities for 2017 = $251,000

Capital expenditures = $135,000,

2017 Ratios:

(a) Earnings per share = $207,000 ($ /58,000 shares) = $3.57

(b) Return on common stockholders’ equity = $207,000/$603,400 * 100 = 34.31%

(c) Return on assets = $207,000/$1,045,900 * 100 = 19.79%

(d) Current ratio = $386,900/212,500 = 1.82

Average Receivable = ($124,800 + 109,800)/2 = $117,300

(e) Accounts receivable turnover = Net Sales/Average Receivable

= $1,897,540/$117,300 = 16.18 times

(f) Average collection period = 365 Days /Average Receivable Turnover ratio. = 365/16.18 = 22.56 days

Average Inventory = ($128,000 + 117,500)/2 = $122,750

(g) Inventory turnover = Cost of goods sold/Average Inventory = $1,065,540/122,750 = 8.68 times

(h) Days in inventory = 365/8.68 = 42.05 days

(i) Times interest earned = Earnings before interest & taxes / Tax expense = $325,000/$94,000 = 3.46 times

(j) Asset turnover = Net Sales/Assets = $1,897,540/$1,045,900 = 1.81  

(k) Debt to assets ratio = Total Debt/Total Assets =  $442,500/$1,045,900 * 100 = 42.31%

(l) Free cash flow = Cash from Operations - Capital Expenditures = $251,000 - $135,000 = $116,000

8 0
2 years ago
Imagine that you are a management coach and one of your clients, a new manager, says, “I’ve heard that about two thirds of manag
Arte-miy333 [17]

Answer:

✔ Asking employees questions helps develop their critical thinking skills.

✘ Asking employees questions boosts their morale by helping them feel like experts, even though they’re not.

✘ Asking employees questions enhances their sense that the manager is the only person they should be in dialogue with, so they start talking less to each other.

✔ Asking employees how to solve problems empowers them to arrive at solutions to which they’re committed.

Explanation:

A manager who asks questions with a sincere interest in the answers is engaging in dialogue similar to a “regular” back-and-forth conversation, and this authenticity builds trust and promotes the open exchange of ideas. Another key benefit is that having employees think about questions, rather than just telling them information or telling them what to do, engages their critical thinking skills—which are key skills for organizational success. Also, when employees are asked how to solve problems, they are likely to have more buy-in to the solution they arrive at than to a solution imposed on them. Many people are motivated by feeling as though their ideas make a positive difference.

Lower-level employees are often the experts in operational details and often have more direct contact with customers than higher-level managers, so they have tremendous expertise that can and should be tapped. Asking employees questions begins an organizational dialogue that can lead to a decentralized communication network, in which employees freely exchange ideas with one another and not just with their manager.

7 0
2 years ago
A simple economy produces two goods, Bread and Technical Manuals. Price and quantity data are as follows:Production and Prices i
DENIUS [597]

Answer: (1) 120,675

(2) 60,450

Explanation:

(1) Nominal GDP, year 2 ($) = Sum of (Year 2 price × Year 2 quantity)

                                              = 150 × 4.50 + 1,200 × 100

                                              = 675 + 120,000

                                            = 120,675

(2) Real GDP, year 2 ($) = Sum of (Year 1 price x Year 2 quantity)

                                        = 3 × 150 + 50 × 1200

                                       = 450 + 60,000

                                        = 60,450

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