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3 years ago

If this company paid annual dividend of $8/share at the latest year-end, and the dividend is

Business

1 answer:

Anna11 [10]3 years ago

8 0

Answer:

The Rational Price of Stock is $114

Yes Stock should buy at $80.

Explanation:

The rational stock price using the dividend discount formula we find the price of stock at the level of $114 = $8 / 7%. The division will gives us rational stock price at which company potential stock price can moves up.

From the given circumstances it is ideal for organization to buy the stock at $80 will help investor to capitalize on gain potential upward movement in the stock price expected to the level of $114 in near future.

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Super Carpeting Inc. just paid a dividend of $2.64 and its dividend is expected to grow at a constant rate of 5.50% per year. If

TiliK225 [7]

Answer:

1. C. $33.76 per share

2. B- The constant growth model can be used if a stock's expected constant growth rateis less than its required return

3. 8.25% ; $35.62 ; 5.5%

Explanation:

1. Using the Constant Growth Model to calculate the intrinsic value would be best given the above values.

The formula is;

Value = Next Dividend / (Required Return - Growth rate)

Value = (2.64 * ( 1 + 5.5%)) / ( 13.75% - 5.5%)

Value = 2.7852/8.25%

Value = $33.76

2. Going by the formula, if the expected growth rate is more than the required return, the intrinsic value would be a negative number and a stock's price cannot go below 0. The growth rate has to be less than the required return for this to work.

3. At Equilibrium, the stock dividend is growing as it should.

Dividend Yield should therefore be;

= Next Dividend / Stock Value * 100

= (2.7852 / 33.76) * 100

= 8.25%

Stock Price should grow at the growth rate so;

= 33.76 * ( 1 + 0.055)

= $35.62

Gains yield refers to what rate the stock will change in value. Growth rate is 5.5% so that will be the answer.

5 0

3 years ago

Mervon Company has two operating departments: Mixing and Bottling. Mixing occupies 26,220 square feet. Bottling occupies 17,480

nordsb [41]

Answer and Explanation:

Given:

Mixing department occupies = 26,220 square feet

Bottling department occupies = 17,480 square feet.

Total maintenance costs = $204,000

Computation of total area:

Total area = (26,220 + 17,480) square feet

Total area = 43,700 square feet

Computation of mixing department maintenance costs:

Mixing department maintenance costs = Total maintenance costs(Mixing department area / Total area)

Mixing department maintenance costs = $204,000(26,220 / 43,700)

Mixing department maintenance costs = $204,000(0.6)

Mixing department maintenance costs = $122,400

Computation of bottling department maintenance costs:

Bottling department maintenance costs = Total maintenance costs(Bottling department area / Total area)

Bottling department maintenance costs = $204,000(17,480 / 43,700)

Bottling department maintenance costs = $204,000(0.4)

Bottling department maintenance costs = $81,600

5 0

3 years ago

Craftwell Inc. pays a $0.75 dividend every quarter and will maintain this policy forever. What price should you pay for one sha

Advocard [28]

Answer:

Quarterly dividend (D) = $0.75

Annual return (Ke) = 10.5% = 0.105

Quarterly return = 0.105/4 = 0.02625

Current market price = <u>Quarterly dividend</u>

Quarterly return

=<u> $0.75</u>

0.02625

= $28.57

Explanation:

Current market price is the ratio of quarterly dividend paid divided by quarterly return.

3 0

3 years ago

Polar bears in captivity exhibit obsessive patterns of behavior such as pacing back and forth on the same spot, swinging their h

kherson [118]

Answer:

c. Stressed polar bears exhibit obsessive patterns of behavior.

Explanation:

If a polar bear is bred in captivity they show an obsessive pattern of behavior.

Such as the passing of the back and forths on the same spot and swimming on their heads from side to side.

And also use their paws to repeatedly strike their heads as a sign of stress. This shows that they don't do well in captivity.

5 0

3 years ago

Turkey Hill Motor Homes currently sells 1,200 Class A motor homes, 2,600 Class C motor homes, and 4,000 pop-up trailers each yea

Colt1911 [192]

Answer:

The erosion cost = $ 49,190,000

Explanation:

Given:

Class A motor homes sold = 1,200

Class C motor homes sold = 2,600

pop-up trailers sold = 4,000

if the new camper is added,

decline in class A sales = 10%

Decline in class C sales = 2,100 units

Average cost of class A motor homes = $ 162,000

Average cost of class C homes = $ 59,500

Selling price for the pop-ups = $ 5,500

cost of the new mid-range camper = $ 32,900

Now,

Erosion cost is given as = Total decline in revenue from the sales

= (Decline in class A sales × Average cost of class A motor homes ) + (Decline in class C sales × Average cost of class C motor homes )

Erosion cost = ( 0.10 × 1,200 × $ 162,000 ) + ( (2,600 - 2,100) × $ 59,500 )

Erosion cost = 19,440,000 + 29,750,000

The erosion cost = $ 49,190,000

3 0

3 years ago