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anygoal [31]
3 years ago
8

Suppose Compco Systems pays no dividends but spent $ 4.92 billion on share repurchases last year. If​ Compco's equity cost of ca

pital is 12.6 %​, and if the amount spent on repurchases is expected to grow by 8.9 % per​ year, estimate​ Compco's market capitalization. If Compco has 6.3 billion shares​ outstanding, to what stock price does this​ correspond?
Business
1 answer:
RUDIKE [14]3 years ago
4 0

Answer:

$144.81 bil or $22.99 per share

Explanation:

We can apply discounted dividend model (DDM) to value the stock in this example because share repurchase is equivalent to cash dividend, which are both cash paid out to shareholders of the company.

DDM is stated as below:

V_o = [D_o x (1 + g)]/(r - g), where:

V_o: Intrinsic value of the company

D_o: Current dividend or Share repurchased in cash;

g: Dividend growth;

r: cost of equity.

Putting all the number together, we have:

V_o = [4.92 x (1 + 8.9%)]/(12.6% - 8.9%) = 144.81 bil or 144.81/6.3 = 22.99 per share

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Joshua borrowed $500 on January 1, 2017, and paid $25 in interest. The bank charged him a service charge of $15. He paid it all
Elena-2011 [213]

Answer: 8%

Explanation:

The Annual Percentage Rate or APR for short is calculated by dividing the finance cost by the total amount borrowed in the following manner,

APR = Finance Charge / Amount borrowed.

To calculate the Finance charge we add the interest and the service charge.

Finance charge = 25 + 15

= $40

Back to the APR formula we will have,

APR = Finance Charge / Amount borrowed

APR = 40/500

= 0.08

APR is 8%.

3 0
3 years ago
You manage a plant that​ mass-produces engines by teams of workers using assembly machines. The technology is summarized by the
Mashcka [7]

Answer:

$2200

Explanation:

will be Lq25.The total cost function is thus given by the sum of the costs of capital, labor, and rawmaterials:TC(q) = rK +wL +2000q = (10,000)(5) + (5,000)(q25) + 2,000 qTC(q) = 50,000 +2200q.The average cost function is then given by:AC(q) TC ( q ) q  50,000  2200 q q . and the marginal cost function is given by: MC ( q )   TC  q  2200.

5 0
3 years ago
"A high-ranking officer of ABC Corporation owns 10,000 shares of ABC Corporation control stock that she wishes to sell under the
LuckyWell [14K]

Answer: $9,000

Explanation:

Rule 144 is a regulation that governs the trading of restricted, unregistered, and control securities and is enforceable by the SEC.

Under the rule, the person, as an officer of the ABC Corporation is limited to selling the higher of 1% of the Outstanding stock the company has or the average weekly trading volume over the preceding 4 weeks.

1% of the outstanding 900,000 shares is;

= 1% * 900,000

= 9,000 shares

This is higher than the average weekly trading volume over the preceding 4 weeks so this is the maximum permitted sales figure.

3 0
3 years ago
The _____ is a strategic management framework that proposes that critical resources and capabilities frequently are embedded in
GenaCL600 [577]
<span>The relational view of competitive advantage is a strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries. The strategic management framework has an enhanced capacity with a much broad focus of the yearly budget process and a strengthened key management.</span>
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3 years ago
Which of the following is not a typical adjustment made to the income statement for projection purposes?
ankoles [38]

Answer:

The correct answer is b. Adjusting revenues to only include organic revenue growth.  

Explanation:

One of the quantitative planning techniques is the projection of financial statements or also called pro forma statements.

The applications that can be had among others are the following:

Know how the year will end for tax purposes in terms of income and deductions in order to make decisions before the end of the year.

Another application will be to know the external financing needs for the period you want to know.

The most common and practical method of projecting financial statements is based on sales.

7 0
3 years ago
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