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alexandr402 [8]
3 years ago
11

Countess Corp. is expected to pay an annual dividend of $5.29 on its common stock in one year. The current stock price is $79.83

per share.
The company announced that it will increase its dividend by 3.40 percent annually.

What is the company's cost of equity?
Business
1 answer:
Nostrana [21]3 years ago
7 0

Answer:

10.03%

Explanation:

Using the dividend discount formula, find the cost of equity; r

r = \frac{D1}{P0} +g

whereby,

D1 = Next year's dividend = 5.29

P0 = Current price of the stock = 79.83

g = growth rate of dividends = 3.40% or 0.034 as a decimal

Next, plug in the numbers to the formula above;

r = \frac{5.29}{79.83} +0.034\\ \\ r =0.06627 + 0.034\\ \\ =0.10027

As a percentage, r = 10.03%

Therefore, the company's cost of equity is 10.03%

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In an open economy, gross domestic product equals $2,450 billion, consumption expenditure equals $1,390 billion, government expe
N76 [4]

Answer:

$735 billion

Explanation:

Calculation to determine the national saving

Using this formula

National saving =Gross domestic product-Consumption expenditure-Government expenditure

Let plug in the formula

National saving=$2,450 billion-$1,390 billion- $325 billion

National saving=$735 billion

Therefore the national saving is $735 billion

7 0
3 years ago
Two eastern European countries formed a free trade agreement. As a result, one of the countries that used to produce its own pla
Aleonysh [2.5K]

Answer:

Trade creation

Explanation:

Trade creation is the process where there is increase in economics welfare as a result of joining a free trade area for example a customs Union.

Consumption experiences a shift from high cost producers to low cost producers causing expansion in trade.

In the given instance due to formation of free trade agreement, high cost plastic production is now replaced with low cost import of plastics from the other company.

There is a shift from high cost producers to low cost producers as a result of trade agreement between the two nations.

3 0
3 years ago
Auditors may decide to perform some tests of controls or not perform any tests of controls, if inherent risk is assessed as ____
Ivanshal [37]

Answer: Moderate or low

Explanation:

Tests of Control are one by auditors to determine the effectiveness of the internal controls in the company in being able to detect accounting errors and anomalies.

If a company seems to have a moderate or low inherent risk the Auditors may or may not initiate Tests of Control due to this reduced risk.

If the company however, has either high or moderate or unusually high risk, the Auditors have to perform Tests of Control to determine where the company is going wrong.

6 0
2 years ago
Nolan Company's cash account shows a $22,064 debit balance and its bank statement shows $22,531 on deposit at the close of busin
Bezzdna [24]

Answer:

Nolan Company

Bank Reconciliation

June 30

                                                                                                     $

Balance per cash book                                                            22,064

Less: Bank Service charges                                                    (       24)

Add: Error in  recording payment ( $ 59- $ 50)                                9

Add: Interest earned                                                               <u>         27</u>

Adjusted balance per cash book                                           <u> 22,076</u>

Balance per bank statement                                                    22,531

Less: Outstanding checks                                                       (  2,655)

Add; Deposits in Transit                                                           <u>   2,200</u>

Adjusted balance per bank statement                                     <u>22,076</u>      

     

Explanation:

The bank service charges and the interest earned appear on the bank statement and has to be adjusted in the cash book balance. The errors found in recording the payment at $ 59 instead of  $ 50 results in an overpayment and the correction needs to be added to the cash book balance

the outstanding checks has not yet been cleared by the bank so there is a reduction on the bank statement balance. The deposits in transit has not been received by the bank so needs to be adjusted as an addition on the bank statement balance.

3 0
3 years ago
Joint Cost Cheyenne, Inc. produces three products from a common input. The joint costs for a typical quarter follow: Direct mate
Drupady [299]

Answer:

a. Total revenue from the 3 products:

= $75,000 + $80,000 + $30,000

= $185,000

Total costs at the split-off point:

= $45,000 + $55,000 + $60,000

= $160,000

Gross profit currently being earned

= Total revenue - Total costs

= $185,000 - $160,000

= $25,000

b. Incremental revenue from product A:

= $116,000 - $75,000

= $41,000

Incremental costs = Rent for special equipment + Materials and labor cost

= $17,500 + $12,650

= $30,150

Incremental gross margin = Incremental revenue - Incremental costs

= $41,000 - $30,150

= $10,850

So, if product A is further processed, quarterly profits will increase by $10,850.

7 0
3 years ago
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