Answer:
The maximum amount that should be paid for one share of this stock today is $15.29
Explanation:
The price of a stock which pays a constant dividend forever can be calculated using the zero dividend growth model of the Dividend Discount Model (DDM) approach. The DDM values a stock based on the present value of the expected future dividends from the stock discounted using the required rate of return on stock.
The formula for price under zero growth model of DDM is,
Price today (P0) = Dividend / required rate of return
P0 = 2.4 / 0.1570
P0 = $15.286 rounded off to $15.29
Answer:
The maximum deduction is $207,000.
Explanation:
As per MACRS depreciation table 5 years half year conversion depreciation rate for first year is 20% - 100%/5 = 20%
The maximum deduction is $1,035,000 * 20% = $207,000
Answer: Jeremy completed his engineering degree.
Explanation:
Since Jeremy has a college degree in engineering he makes more money than Rose who dropped out of college. College graduates are in higher demand to work the jobs that pay more than smaller companies. If Rose had of completed her college degree she could of found a job that uses her education and made more money.
Since Jeremy has a specific degree the company hired him based on his knowledge of the subject. He will be paid higher and most likely have better benefits than someone in an entry level position.
Answer:
$125,165.49
Explanation:
Daily Sales Outstanding is computed by dividing Average Accounts Receivable over Daily Credit Sales.
In this case, if the DSO is 71, then the Daily Credit Sale is $2,887.3239($205,000/71).
Then, the old sales is $1,053,873.24 ($2887.3239 x 365).
If this is reduced by 15% after the policy is implemented, the new sales is $895,792.25 ($1,053,873.23-15%) and the new daily sales is $2,454.23 ($895,792.25/365).
Using these DSO formula, the new Accounts Receivable level will be $125,165.49 (51 x $2,454.23).
