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sergiy2304 [10]
2 years ago
6

Tim's Tools just issued a dividend of $2.22 per share on its common stock. The company is expected to maintain a constant 2.8 pe

rcent growth rate in its dividends indefinitely. If the stock sells for $19 a share, what is the company's cost of equity?
Business
1 answer:
LekaFEV [45]2 years ago
4 0

Answer:

expected return = 12.03%

Explanation:

using the dividends growth model we can calculate the required return

\frac{divends}{return-growth} = Intrinsic \: Value

2.22 x 1.03 = 2.2866

We must remember that the gordel model is used with next year dividends

2.2866(return - 0.023) = 19

2.2866/19      +0.023 = return

return = 12.03%

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Larson Company on July 15 sells merchandise on account to Stuart Co. for $1,000, terms 2/10, n/30. On July 20 Stuart Co. returns
pickupchik [31]

Answer:

b. $588

Explanation:

Terms 2/10, n/30 means that 2% discount for the payment within 10 days and the full amount to be paid within 30 days.

When Larson Company sold merchandise, the following entry was made to recording revenue (sales) and the receivable:

Debit Receivable Account $1,000

Credit Revenue $1,000

On July 20 Stuart Co. returns merchandise, the entry is made to record the decreasing of Receivable Account:

Debit Revenue $400

Credit Receivable Account $400

The balance Receivable Account of Stuart Co. = $1000-$400 = $600

On July 24, Stuart Co. makes the payment, the sales discount was:

$600 x 2% = $12

The amount of cash received = $600-$12=$588

The following entry is made:

Debit Cash: $588

Debit Sales discount: $12

Credit Receivable Account $600

7 0
3 years ago
I got asked out last week by one popular kids at school, i knew something was up; but instead i looked down......
ch4aika [34]
Hahaha I got this!!!
6 0
2 years ago
During the second year of the equipment’s life, $21,900 cash is paid for a new component expected to increase the equipment’s pr
Alona [7]

Answer:

   S/N              ACCOUNT                                 DEBIT                  CREDIT

      1             Equipment                                   $22,000

                        Cash                                                                     $22,000  

                    Being payment for new component expected to increase the

                    equipment’s productivity by 10% a year

      2.           Equipment Repairs expenses      $6,250

                       Cash                                                                          $6,250

                    Being payment for equipment repair

     3.            Equipment                                       $14,870

                       Cash                                                                          $14,870

                    Being payment for equipment repair to prolong the useful life

                    the asset

Explanation:

The initial cost incurred in acquiring an asset is debited to asset account, subsequently every other cost spent on the assets are either expenses against the earning of that period or expensed over many years over the useful life of the asset.

Capitalization is the recognition of an expense as an asset in the balance sheet rather than expenses in the income statement.

The payment of $22,000 paid for the equipment productivity must be capitalized, that is added to the cost of the asset because it is a cost that is  expected to increase the equipment’s productivity by 10% a year.

The  $6,250  paid for normal repair is a revenue items which is to be expensed against the earning of that period.

The $14,870 paid for repairs which will increase the useful life of the equipment from four to five years is a capital expenditure which should capitalized, that is added to the cost of the asset.

7 0
3 years ago
g An automobile dealer expects to sell 529 cars a year. The cars cost $11,000 plus a fixed charge of $500 per delivery. If it co
harkovskaia [24]

Answer:

Order size = 23 cars

The number of orders = 23

Explanation:

The economic order quantity (EOQ) is the order size that reduces the balance of holding and ordering cost. It is to be noted that at EOQ, the carrying cost is equal to the holding cost.

The EOQ is computed as shown below;

= √ 2 × Co × D)/Ch

Co = Ordering cost

D = Annual demand

Ch = Carrying cost

EOQ = √ 2 × 500 × 529 / 1,000

EOQ = 23

Number of cars to be ordered per time, I.e optimal order size = 23

Order size = 23 cars

2. The number of times orders should be placed per year would be calculated as;

Number of orders = Annual demand / Order size

Number of orders = 529 / 23

Number of orders = 23

4 0
2 years ago
Let’s assume that we are about to appraise a house using the cost approach. The home was originally constructed in the early 190
guajiro [1.7K]

Answer:

$290,000

Explanation:

We start with the cost of building a replica of the house:

building a new house:                 $350,000

plus highest and best use             $25,000

minus perceived value loss          ($20,000)

minus physical deterioration        ($50,000)

<u>minus building obsolescence       ($15,000)  </u>

appraised value                            $290,000

8 0
3 years ago
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