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maria [59]
3 years ago
14

Janet is planning to purchase the stock of Mortensen Petro, Inc. She expects the stock to pay a $1.98 dividend next year, and sh

e would sell the stock for $28 next year. If the required return of the stock is 12.5%, what is the (highest) price that she is willing to pay for the stock today?
Business
1 answer:
Arada [10]3 years ago
7 0

Answer: Current Price $26.65

Explanation:

Rate of return = 12.5%

dividends = $1.98

Expected Price (in a year from now) Pe= $28

Current price = Pc

R = (Pe - Pc + D)/Pa

0.1250 = (28 - Pc + 1.98)/Pc

28 - Pc + 1.98 = 0.1250Pc

-Pc - 0.1250Pc = - 28 - 1.98

- 1.125Pc = -29.98

 Pc = -29.98/(-1.1250Pc) = 26.64888889

 Pc = $ 26.65

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The personal income is $700. 
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Disposal personal income (dpi) = $800
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Solution:
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4 0
3 years ago
On a CVP chart, on either side of the break-even point, the vertical distance between the total sales line and the total cost li
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Answer:

The answer is:

Total loss to the left of the intersection

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Total profit to the right of the intersection

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5 0
2 years ago
Haven Company uses the percentage of receivables method for recording bad debt expense. The accounts receivable balance is $600,
Katena32 [7]

Answer:

Debit Bad debt expense   $19,000

Credit Allowance for doubtful debt   $19,000

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When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.  

To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.

Where a debit that had previously been determined to have gone bad gets settled, debit cash and credit bad debt expense.

Amount that may be uncollectible

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3 years ago
Three documents required by Department of Trade and Industry when registering a private company
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Identification
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