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
IgorLugansk [536]
3 years ago
7

Graphical Designs is offering 20-20 preferred stock. The stock will pay an annual dividend of $20 with the first dividend paymen

t occurring 20 years from today. The required return on this stock is 5.10 percent. What is the price of the stock today?
Business
1 answer:
Anastaziya [24]3 years ago
7 0

Answer:

$ 152.35  

Explanation:

The stock price today can be computed by first determining the future value of the dividend in perpetuity ,then discounting that to present value.

Value in perpetuity=dividend/required return

dividend is $20

required return is 5.10%

value in perpetuity=$20/5.10%=$392.16

The price of the stock today is the present value of the value in perpetuity

PV=FV*(1+r)^-n

FV is $392.16

r is the required return of 5.10%

n is the number of years involved,which is 19,it is 19 because counting from today till the next next years would be first day of the next twenty years

price=$392*(1+5.10%)^-19=$ 152.35  

You might be interested in
On January 2, 2015, Moser, Inc., purchased equipment for $100,000. The equipment was expected to have a $10,000 salvage value at
OLEGan [10]

Answer:

a. Debit Depreciation expense $6,400

   Credit Accumulated depreciation $6,400

b. $33,600

Explanation:

Depreciation is the systematic allocation of cost to an asset. It is given as

Depreciation =  (Cost - salvage value)/estimated life

When accumulated over time, it is known as accumulated depreciation which is deducted from the cost to get the carrying amount of the asset.

Depreciation

= (100000 - 10000)/6

=$15,000

Between 2015 and start of 2019 is 4 years hence

accumulated depreciation at start of 2019

= $15,000 × 4

= $60,000

Net book value  = $100,000 - $60,000

= $40,000

If the asset life is to be extended by 3 years, the remaining useful life changes from 2 to 5 years.

New depreciation rate

= (40,000 - 8000)/5

= $6,400

To record this for 2019,

Debit Depreciation expense $6,400

Credit Accumulated depreciation $6,400

The book value of the equipment at the end of 2019

= $40,000 -  $6,400

= $33,600

4 0
3 years ago
if a farm has nfio of $100,000, and an opportunity cost total of $25,000, what is the farm's return to equity? (round to the nea
tiny-mole [99]

The return to equity is $75000

Another form of financial ratio is the return on equity. Financial ratios are data taken from a firm's financial statements and used to predict and draw specific conclusions about the organization.

Relative return on equity is a tool used to forecast a company's profitability. It evaluates how effectively people employed in any business have used the money that has been invested.

Since the farm has Nfio of $100,000 and an opportunity cost total of $25,000.

Therefore,

Return on equity -

Net Farm Income from Operations - Opportunity cost

= 1,00,000 - 25,000

= 75,000

Read more about a return to equity on:

brainly.com/question/28500740

#SPJ4

7 0
1 year ago
Hailey Corporation pays a constant $9.45 dividend on its stock. The company will maintain this dividend for the next 13 years an
Sloan [31]

Answer:

$64.76

Explanation:

The current share price can be determined by calculating the present value of the dividend

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow from year 1 to 13 = 9.45

I = 10.7

PV = 64.76

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

5 0
3 years ago
According to the Investment Company Act of 1940, the definition of "investment company" could include which of the following
kicyunya [14]

Answer:

Option (B) is the right answer.

Explanation:

According to the investment company Act of 1940, the investment companies are those companies whose main business is to gathers investment capital to invest them in marketable securities.

Hence According to the scenario, the most appropriate answer is option (B).

While the other option is incorrect because of the following reason:

  • Brokers/dealers can not be considered as an investment company because they are not the company.
  • Pooled investments in metals are not an investment company but considered as the commodity pool.
  • Insurance companies are also not investment companies.

7 0
3 years ago
A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ord
Marianna [84]

Answer:

the total cost of ordering and holding sugar is $1,000 per year

Explanation:

<em>Step 1 Calculate the Economic Order Quantity(EOQ).</em>

EOQ = √(2×Total Demand×Ordering cost)/ Holding Cost per Unit

        = √(2×250×20×5)/20

        = 50

<em>Step 2 Calculate the total  cost of ordering and holding sugar</em>

Total cost = Ordering Cost + Holding Cost

                = (250×20)/50 × $5 + 50/2 × $20

                = $500+$500

                = $1,000

Therefore,  the total cost of ordering and holding sugar is $1,000 per year

3 0
3 years ago
Other questions:
  • Ricky told his team that he is moving forward with a change to the bonus structure, despite vocal objections from several team m
    7·1 answer
  • At the beginning of the year (January 1), Buffalo Drilling has $10,000 of common stock outstanding and retained earnings of $7,2
    5·1 answer
  • Kane Corp. obtained a business loan from a bank. A year later, the company transferred the ownership of one of its properties to
    13·2 answers
  • Identify two changes to personal information which you must report to your employer.
    10·1 answer
  • Many firms choose not to implement operational components of ERP software and instead elect to create their own propriety soluti
    5·1 answer
  • At the beginning of its fiscal year, Lakeside Inc. leased office space to LTT Corporation under a seven-year operating lease agr
    13·1 answer
  • Calculate the degree of operating leverage for the company below:Expected Quantity 50,000Total costs300,000Variable costs215,000
    11·1 answer
  • The Talbot Company uses electrical assemblies to produce an array of small appliances. One of its high cost / high volume assemb
    12·1 answer
  • What part of wildlife management involves trapping animals in areas where they are abundant and releasing them in areas of suita
    9·1 answer
  • After getting married, Joe, 32, and Melinda, 29, decide to take out life insurance policies. Joe would like a 15-year term polic
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!