Answer: 7.25%
Explanation:
To calculate this we will use the Constant Growth Model of calculating a Stock's price.
The formula is,
P = D1/(r-g),
where,
P is the current price,
D is the next dividend the company is to pay,
g is the expected growth rate in the dividend payment and
r is the required rate of return for the company.
We were given the Dividend Yield and with this can calculate the Stock Price.
The Dividend yield is the Dividend expressed as a percentage of Stock Price.
Making the stock price x with the next dividend at $1.54 we have
1.54 = 0.032x
x = 1.54/0.032
= $48.13
Now that we have the stock price we can plug it into the formula.
We also need to calculate the growth rate. Given that $1.48 was paid and $1.54 will be paid we can say,
g= 1.54 - 1.48
g= 0.06/1.48
= 4.05% is what it will take to grow $1.48 to $1.54
Now we can plug all these into the formula,
Making r the subject we have,
r = D1/P + g
= 1.54/48.13 + 0.0405
= 7.25%
The required rate of return on this stock is therefore 7.25%.
Answer:
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Explanation:
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Answer:
Total cash collection= $20,375
Explanation:
Giving the following information:
Big Wheel, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale.
<u>Sales:</u>
March= $16,300
April= $32,600
<u>Cash collection April:</u>
Sales on account from April= 32,600*0.25= 8,150
Sales on account from March= 16,300*0.75= 12,225
Total cash collection= $20,375
Answer:
Only those transactions that involve cash payments or cash receipts are recorded in the cash journal:
May 1, C. Li contributes cash tot he company
Dr Cash 12,000
Cr C. Li., capital 12,000
May 15, cash received from bank loan
Dr Cash 8,500
Cr Notes payable 8,500
May 18, collections from E. James
Dr Cash 1,250
Cr Accounts receivable 1,250
May 24, merchandise sold to B. Cox
Dr Cash 950
Cr Sales revenue 950
Dr Cost of goods sold 900
Cr Inventory 900
The May 7 and May 9 transactions should be recorded in the sales journal but not in the cash journal since they involve accounts receivables. COGS from May 24 transaction should also be recorded in the cash journal because the sales were on cash.