Answer:
7.31%
Explanation:
Data provided in the question:
Annual dividend paid, D0 = $1.48
Dividend growth rate, g = 2.2% = 0.022
Current stock price per share = $29.60
Now,
Current price of share = D1 ÷ (r - g) .........(1)
Here,
r is the required rate of return
D1 = dividend at year 1 = D0 × (1 + g)
= $1.48 × (1 + 0.022)
= $1.51256
Therefore, from (1) we get
$29.60 = $1.51256 ÷ (r - 0.022)
or
(r - 0.022) = 0.0511
or
r = 0.0511 + 0.022
or
r = 0.0731
or
r = 0.0731 × 100% = 7.31%
Answer:
The correct option here is D) $450,000.
Explanation:
The differential revenue from the acceptance offer is the additional amount of revenue that will be generated without affecting the revenue generated from the domestic sales in the normal course of operations.
The differential revenue from acceptance of offer can be calculated as -
= Selling price per unit per offer x number of units per offer
= $15 x 30,000
= $450,000
Therefore $450,000 is the differential revenue from the acceptance of offer.
Answer:
False
Explanation:
Purchasing power increases by amount of deflation (negative inflation). So, while inflation lowers purchasing power, deflation increases purchasing power by amount of deflation.
Increase in purchasing power = 7%
Reliability requires that the information should be accurate and true and fair, neutral and unbiased, verifiable and using the same method would come up with similar results or numbers. Reliable information includes information from experts in the field
, information from recognized and reputable organizations
and information that can be verified by other sources.It's important to use information that is both reliable and relevant when making financial decisions.
Answer:
A. True
Explanation:
The terms of 2/10, net 30 implies that the firm is entitled to receive a 2 percent discount if it makes payment within 10 days for the goods it bought on term but the seller expects to pay full amount of the amount due in 30 days if it fails to pay within 10 days.
However, since there will be no more discount after the discount period, the cost of trade credit will continue to fall longer the payment is extended. For this question this can be demonstrated using the formula for calculating the cost of trade discount as follows:
Cost of trade discount = {[1 + (discount rate / (1 - discount rate))]^(365/days after discount)} - 1 ................... (1)
We can now applying equation (1) as follows:
<u>For payment in 40 days </u>
Cost of trade credit (payment in 40 days)= {[1 + (0.02 / (1 - 0.02))]^(365/40)} - 1 = 0.202436246672765, or 20%
<u>For payment in 30 days </u>
Cost of trade credit (payment in 30 days) = {[1 + (0.02 / (1 - 0.02))]^(365/30)} - 1 = 0.278643315029666, or 28%
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<u>Conclusion</u>
Since the 20% calculated cost of trade credit for payment in 40 days is lower than 28% calculated cost of trade credit for payment in 30 days, the <u>correct option is A. True</u>. That is, the calculated cost of trade credit for a firm that buys on terms of 2/10, net 30, is lower (other things held constant) if the firm plans to pay in 40 days than in 30 days.
