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ElenaW [278]
3 years ago
10

BioScience Inc. will pay a common stock dividend of $4.60 at the end of the year (D1). The required return on common stock (Ke)

is 17 percent. The firm has a constant growth rate (g) of 7 percent. Compute the current price of the stock (P0)
Current Price______________
Business
1 answer:
Angelina_Jolie [31]3 years ago
8 0

Answer:

The current price of the stock is $46

Explanation:

We will use the gordon growth model to calculate the price of the stock. The formula is

Price= D1/R-G

D1 is the year end dividend

R is the required return on the stock and G is the constant growth rate.

We will plug in the numbers in the formula in order to find the price.

4.60/(0.17-0.07)=46

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A company is preparing its cash budget. Its cash balance on January 1 is $290,000, and it has a minimum cash requirement of $340
boyakko [2]

Answer:

The correct answer is:

excess of $15,800 (d.)

Explanation:

In order to calculate the cash excess or deficiency for March, we have to determine the net balance for the period from January, February and March, after deducting the total expenditures from the incomes as follows:

Cash Receipts (income)

January 1 balance = $   290,000

January                  = $ 1,061,200

February                = $ 1,182,400

March                     = $ 1,091,700

Total cash receipt = $3,625,300

Cash payments (expenditure)

January                  = $  984,500

February                = $ 1,210,000

March                     = $ 1,075,000

Total payments      = $ 3,269,500

Net cash available = total cash receipts - total cash payments

= 3,625,300 - 3,269,500 = $355,800

Note, we are told that the minimum cash requirement = $340,000

Therefore:

Cash excess (deficiency) = Net cash available - minimum cash requirement

= 355,800 - 340,000 = $15,800 (excess)

<em>excess because cash available is greater than the minimum cash requirement.</em>

5 0
3 years ago
The two general kinds of trade barriers are _____.
lana66690 [7]
I think the answer is A
3 0
3 years ago
The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking u
jenyasd209 [6]

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

5 0
3 years ago
Majestic Homes' stock traditionally provides an 7% rate of return. The company just paid a $2 a year dividend which is expected
liberstina [14]

Answer:

$52

Explanation:

Data provided as per the question

Recent dividend = $2

Market rate of return = 8%

Growth Rate = 4%

(Its expected to increase so it will be (1 + 4%) = 1.4%

The computation of price is shown below:-

Price = Recent dividend × (1 + Growth rate ) ÷ (Cost of equity - Growth rate)

= ($2 × 1.04) ÷ (0.08 - 0.04)

= $2.08 ÷ 0.04

= $52

6 0
3 years ago
Ellis issues 8.0%, five-year bonds dated January 1, 2018, with a $530,000 par value. The bonds pay interest on June 30 and Decem
Ket [755]

Answer:

1. Total interest rate is $166,790

2. Refer to the attached file for the straight-line amortization table for the bonds' life.

3.

To record interest rate paid in 30th June 2018:

Dr Interest expenses                            16,679

Dr Premium on bond payable             4,521

Cr Cash                                                 21,200

To record interest rate paid in 31st Dec 2018:

Dr Interest expenses                            16,679

Dr Premium on bond payable             4,521

Cr Cash                                                 21,200

Explanation:

Total interest rate as followed : Interest payment - Premium on bond payable = 530,000 x 8% /2 x 10 - (575,210 - 530,000) =166,790.

6 0
3 years ago
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