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
yanalaym [24]
3 years ago
5

Atlas Home Supply has paid a constant annual dividend of $2.40 a share for the past 15 years. Yesterday, the firm announced the

dividend will increase next year by 10 percent and will stay at that level through Year 3, after which time the dividends will increase by 2 percent annually. The required return on this stock is 12 percent. What is the current value per share?A) $25.51B) $26.08C) $24.57D) $26.02E) $26.84
Business
1 answer:
Anestetic [448]3 years ago
5 0

Answer:

option (A) $25.51

Explanation:

Given:

Annual dividend = $2.40

Dividend increase rate, g = 10% = 0.1

Dividend increase rate after 3 years, g' = 2% = 0.02

Required return on stock, r = 12% = 0.12

Now,

Price after 3 years = \frac{\textup{Annual dividend }\times(1+g)\times(1+g')}{\textup{(r-g')}}

= \frac{\textup{2.40}\times(1+0.1)\times(1+0.02)}{\textup{(0.12-0.02)}}

= $26.928

Therefore,

The current value per share = \frac{\$2.40\times1.10}{(1+0.12)^1} + \frac{\$2.40\times1.1}{(1+0.12)^2} + (\$2.40\times1.1} + \frac{\$26.928}{(1+0.12)^3} )

or

The current value per share = $25.51

Hence,

the correct answer is option (A) $25.51

You might be interested in
Melinda kept a record of her spending for the week. She spent $25 to put gas in the car, bought a new shirt for a total of $22.3
shtirl [24]
She spent 93.04 doing the week
4 0
3 years ago
According to the consumer bill of rights, the idea that consumers' interests should receive full and sympathetic consideration i
Serga [27]

Answer:

right to <u>the consumer</u>.

Explanation:

According to the customer bill of rights, in this doctrine the consumers' enthusiasm should obtain adequate and compassionate deliberation in the formulation of the government strategy is identified as the right to<u> the consumer</u>. Proceeding from March 15 the year 1962, President John F. Kennedy portrayed a conversation to the Congress of the US in which the president extolled 4 fundamental customer powers, following described as Consumer Bill of Rights. The UN by the UN guide-manual for Consumer Protection extended those into 8 equities, and consequently, Consumers International affirmed those equities as law and began identifying on 15 of the March as World Consumer Rights.

3 0
4 years ago
A firm is evaluating a project with an initial investment at time 0 of $640,000. The present value of the levered cash flows is
monitta

Answer:

Using the flow-equity method of valuation the borrowed is $67600,option B.

Explanation:

In order to determine the amount borrowed in executing the project, we make use of the below formula which shows that we are working  backwards.

Amount borrowed=present value of cash inflows-levered cash flows

present value of cash inflows=net present value+initial investment

present value of cash inflows=$157000+$640000

present value of cash inflows=$797000

levered cash flows=$729400

Amount borrowed=$797000-$729400

amount borrowed =$67600

8 0
4 years ago
Emerald Co. uses a perpetual inventory system and records purchases of merchandise at net cost. The company recently purchased 2
Aneli [31]

Answer:

Dr accounts payable   $2,300

Cr cash                                      $2300

Explanation:

Initially the cost of the purchases=$4600

Returning half of the disc means the left for the discs actually bought is half of the invoice price of $4600 i.e $2,300

By not paying within the discount period implies that the debt stands at $2,300

Without mincing words,payment of $2,300 to the supplier automatically translates to debiting account payable with $2,300 and crediting cash account with the same amount.

The correct answer would :

Dr accounts payable   $2,300

Cr cash                                      $2300

This is missing from the options provided.

3 0
3 years ago
On January 1, Year 1, Ballard company purchased a machine for $28,000. On January 1, Year 2, the company spent $7,000 to improve
timofeeve [1]

Answer:

$23,520

Explanation:

The computation of book value of the machine is shown below:-

Machine cost                           $28,000

Less: Depreciation                    $4,200

($28,000 - $2,800) ÷ 6

Book Value at beginning

of Year 2                                    $23,800

Add: Improvements                   $7,000

Total                                             $54,600

Less: Accumulated

Depreciation for 3 years            $31,080

($54,600 - $2,800) × 3 ÷ 5 years

Book Value Dec 31, Year 4         $23,520

3 0
3 years ago
Other questions:
  • An example of negative peer pressure may include
    9·2 answers
  • Finding the interest rate and the number of years The future value and present value equations also help in finding the interest
    7·1 answer
  • What makes government contracts unique?
    14·2 answers
  • Which of the following effects best explains the downward slope of the aggregate demand curve? A. A multiplier effect B. An expe
    5·1 answer
  • Drag each description to the correct location on the graph. This graph is the production possibility curve for a country's combi
    13·1 answer
  • Which of the following lists correctly identifies a few of the basic elements all market economies share?
    15·2 answers
  • What is the expected dollar rate of return on dollar deposits with today's exchange rate at $1.10 per euro, next year's expected
    12·1 answer
  • Child labor laws govern the_______ , type of job, and hours of work for anyone younger than eighteen years old.
    11·2 answers
  • Sheridan Company borrowed $3200000 on a construction loan at 12% interest on January 2, 2020. This loan was outstanding during t
    11·1 answer
  • A customer makes a purchase of $22,100 of acme income fund in her margin account. the customer must deposit: _________
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!