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
Artemon [7]
3 years ago
9

Weaver Chocolate Co. expects to earn $3.50 per share during the current year, its expected dividend payout ratio is 65%, its exp

ected constant dividend growth rate is 6.0%, and its common stock currently sells for $32.50 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock?Weaver Chocolate Co. expects to earn $3.50 per share during the current year, its expected dividend payout ratio is 65%, its expected constant dividend growth rate is 6.0%, and its common stock currently sells for $32.50 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock?
Business
1 answer:
dusya [7]3 years ago
8 0

Answer:

<u><em>Cost of Equity =   13.36% </em></u>

Explanation:

Cost of Equity is required = ??

Discounted Dividend Model or DDM model can be used to calculate cost of equity from new common stock.

Before starting to solve, let's find out what have been given already:

Earnings = 3.50 USD

Payout Ratio = 65%

G = Growth Rate = 6.0%

F = Flotation Cost = 5%

P = Current Share Price = 32.50 USD

First Step is to find out the expected dividend.

Dividend = Expected Earning x Payout Ratio

Dividend = 3.50 x 65%

D = Dividend = 2.275 USD

So, now we have everything on board, let's find out cost of equity.

Cost of Equity = \frac{D}{P(1-F)} + G

Cost of Equity = \frac{2.275}{32.50(1-0.05)} + 0.06

<u><em>Cost of Equity =   13.36% </em></u>

You might be interested in
Assume an annual interest rate of 8%. You have $1. What is the value of the $1 one year in the future
seropon [69]

Answer:

the future value is $1.08

Explanation:

The computation of the future value is shown below:

As we know that

Future value = Present value × (1 + rate of interest)^number of years

= $1 × (1 + 0.08)^1

= $1 × 1.08

= $1.08

Hence, the future value is $1.08

3 0
2 years ago
Video news releases are ______. Group of answer choices None of the above options is correct produced by PR agencies and compani
VLD [36.1K]

Answer:

produced by PR agencies and companies for use in TV newscasts.

Explanation:

Public relations involves the process of professionally maintaining and sustaining a favourable public perception and image by an organization or an elite.

It is a strategic communication process used by PR managers to issue and disseminate quality informations between their principal (usually an individual) or an organization and the public, in order to build a mutualistic relationship and boost their level of sales.

Public relations is a marketing tool that combine news covered by the media which are often not a directly paid for medium and is typically used to influence, inform and persuade the consumer to purchase a product.

A video news releases is a segment or portion of a video that's produced to have similarities with news report and are sent to media houses.

On a related note, video news releases are produced by public relations (PR) agencies and companies for use in TV newscasts.

5 0
3 years ago
The existence of conflict is an inevitable part of group dynamics.true or false
Elden [556K]

Answer:

The statement is true

Explanation:

Group dynamics is a system of processes of psychological and behaviours which is occurring within a social group. As group is of two or more people so they have different behaviour or act upon differently. So, there is existence of conflict is an inevitable or unavoidable is a part of the group dynamics.

It could happen when the group does not agree on single decision or to act in favour.

4 0
3 years ago
During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pr
ANEK [815]

Answer:

Fixed costs= 1,100,000

Explanation:

Giving the following information:

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000.

We need to reverse engineer the income statement to determine the total fixed costs. We know that the pretax income is the difference between the total contribution margin and the fixed costs.

Pretax= total contribution margin - fixed costs

400,000= 1,500,000 - FC

Fixed costs= 1,500,000 - 400,000

Fixed costs= 1,100,000

5 0
3 years ago
Mettel Products sells 100,000 flash drives annually to industrial distributors who resell the drives to business customers for $
Cerrena [4.2K]

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Mettel Products sells 100,000 flash drives annually to industrial distributors who resell the drives to business customers for $40 each. The distributors’ margins are 25%. Mettel Products’ cost of goods sold is $10.00 each. Mettel’s total variable costs (including selling costs) are $15.00 per drive.

Selling price= 40/1.25= $32

A) Gross margin= 32 - 15= 17

%= 53%

B) Mettel is considering increasing its annual advertising spending from $75,000 to $150,000.

Break-even point= fixed costs/ contribution margin

Break-even points= 150,000/17= 8,824 units

C) Break-even points= 75,000/14= 5,357 units

7 0
2 years ago
Other questions:
  • ​Piper, Inc. reported sales of $ 348000.00​; beginning net Accounts Receivable of $ 89000.00 and ending net Accounts Receivable
    15·1 answer
  • At a price of $4 per unit, Gadgets Inc. is willing to supply 20,000 gadgets, while United Gadgets is willing to supply 10,000 ga
    7·1 answer
  • Which of the following statements is TRUE about payday loans? A. They are harder to pay back because of high fees and B. They ar
    7·2 answers
  • In the National Business Ethics Survey, ________ of the employees identified pressure to meet unrealistic objectives as the most
    12·1 answer
  • What is the best car in the market? How much is it?
    7·1 answer
  • A person takes out a car loan at a bank, but actually uses the money to play the lottery. This situation is an example of which
    6·1 answer
  • A business incurs a blank when expenses are higher then revenue
    13·1 answer
  • Priscella pursued a hobby of making bedspreads in her spare time. Her AGI before considering the hobby is $40,000. During 2019 s
    10·1 answer
  • Which of the following parts of a business plan include the cash flow projection and profit and loss projection?
    13·1 answer
  • QUESTION 2 of 10: A sports franchise posted a video which resulted in viewers purchasing 60,000 team shirts. This was 20% of vie
    11·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!