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Nataliya [291]
4 years ago
6

The ZZZ Corporation has preferred stock. The preferred stock pays a dividend per share every year of $6.50. The stock sells for

$81.25 per share. TRUE or FALSE: The required return of investors in the stock is 8%.
Business
2 answers:
defon4 years ago
8 0

Answer:

True

Explanation:

The statement is true because according to dividend growth method the price of the given preferred stock is $81.25.

Formula to calculate the prce of share using Dividend growth method is

Price of share = D0 / (Rate of return - Growth rate)

In case of preferred stock a stable dividend is paid and there is no growth in the dividend payment.

so

Price of share = D0 / (Rate of return - 0)

Price of share = D0 / Rate of return

Share price = $6.5 /  0.08

Share Price = $81.25

Furkat [3]4 years ago
8 0

Answer:

The answer to the question is<em> YES</em>

Explanation:

What is Return on Investment (ROI)?

Return on investment (ROI) is a financial ratio used to calculate the benefit an investor will receive in relation to their investment cost. It is most commonly measured as net income divided by the original capital cost of the investment. The higher the ratio, the greater the benefit earned.

Therefore, the formula to find the Return on Investment for the question - The ZZZ Corporation has preferred stock. The preferred stock pays a dividend per share every year of $6.50. The stock sells for $81.25 per share. TRUE or FALSE: The required return of investors in the stock is 8%.

ROI = Net Profit ÷ Total Investment x 100

∴ $6.50 = Net Profit (Yearly Dividend par share);

   $81.25 = Total Investment (Market Price of the stock);

Applying the formula: 6.50/81.25 x 100 =7.97≅ 8% (approximately)

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A point outside the production possibilities curve represents a combination of goods that is
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Answer:

A production combination outside of the PPF is unattainable by the economy with the given resources and technology.

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If the economy wishes to achieve the production point outside the frontier, they will have to enhance the production possibility capacity by introducing new technology or finding new resources.

Explanation:

4 0
3 years ago
. The start of noncritical activities are delayed beyond their earliest start times (but not beyond their latest start times) in
ozzi

The correct answer is D) maintain a uniform level of required resources.

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That is why companies have to establish their priorities and identify the main activities that must be accomplished on time, the people responsible to accomplish the activity, and the resources needed to successfully do so. Noncritical activities can be delayed up to a point, but the critical activities have to be followed according to the schedule.

7 0
3 years ago
A farmer sells $50,000 worth of apples to individuals who take them home to eat, $75,000 worth to a company that uses them all t
IrinaK [193]

Answer:

The answer is: $150,000

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The apples sold directly by the farmer to individual consumers and the apples the grocery store sells to households are both going to be included in the GDP.

The only apples not included in the GDP are the once sold to the company that produces apple juice, since they are intermediate goods and not finished goods.  

6 0
3 years ago
Cache Creek Manufacturing Company is expected to pay a dividend of $4.20 in the upcoming year. Dividends are expected to grow at
Digiron [165]

Answer: 0.9

Explanation:

The Expected Return on an investment can be calculated using the Dividend Discount Model as it is a key component in thw formula which is,

P = D1 / r - g

where,

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P is the current stock price

g is the growth rate

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With the given figures we have,

84 = 4.20 / r - 0.08

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The Expected Return can be slotted into the CAPM formula to find the beta.

The CAPM formula calculates the Expected Return in the following manner,

Er = Rf + b( Rm - rF)

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b is beta

Slotting in the figures gives,

0.13 = 0.04 + b( 0.14 - 0.04)

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0.13 - 0.04 = 0.1b

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Using the constant-growth DDM and the CAPM, the beta of the stock is 0.9

8 0
3 years ago
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