Answer:
B/E ratio 1.2356
Explanation:
300,000 - 43,000 = 257,000
257,000/0.04 = 6,425,000
initial cost 2,200,000
unkeep cost 120,000/0.04 = 3,000,000
6,425,000/(2,200,000+3,000,000) = 1.235576923
Note we are given a discount rate, which means the upkeep, benefits and disbenefits are perpetual.
Answer:
A) 16%
Explanation:
If we want to compare the return of a 1 year CD versus the return of a 2 year CD:
- a 2 year CD will yield 2 x 12% = 24% at the end of year 2
- a 1 yer CD will yield 8% at the end of year 1
the difference between the return of a 2 year CD and a 1 year CD = 24% - 8% = 16%
Answer:
A. $8,200
B. $7,800
C.The retained earnings will report the changes in retained earnings for a business entity during a time period
Explanation:
A. Preparation of the statement of retained earnings
Statement of Retained earnings for the month ending June 30, 2018.
Retained Earning June 1 2018 $3,400
Add Net income for the month $7,800
Total $11,200
Less:Dividend $3,000
Retained earnings June 30 $8,200
($11,200-$3,000)
Therefore the Statement of Retained earnings for June 30 will shows the amount of $8,200
2.Preparation of Income statement
Income statementfor the month ending June 30, 2018.
Revenue:
Service Revenue $10,800
Less :Expenses
Salary expenses ($2,200)
Rent expenses ($800)
Net income $7,800
($10,800-$3,000)
Therefore Winniford Towing Service Income statement Net income show the amount of $7,800.
C. Based on the above calculation the statement of retained earnings will report the changes in retained earnings for a business entity during a time period
Answer:
a. from one banks to another
Explanation:
Answer:
P0 = $57.6722 rounded off to $57.67
Explanation:
To calculate the market price of the stock today, we will use the two stage growth model of DDM. The two stage growth model calculates the values of the stock today based on the present value of the expected future dividends from the stock. The formula for price today under this model is,
P0 = D0 * (1+g1) / (1+r) + D0 * (1+g1)^2 / (1+r)^2 + ... + D0 * (1+g1)^n / (1+r)^n + [(D0 * (1+g1)^n * (1+g2)) / (r - g2)] / (1+r)^n
Where,
- g1 is the short term growth rate
- g2 is the long term or constant growth
- r is the required rate of return on the stock
We first need to calculate r using the CAPM equation. The equation is,
r = rRF + Beta * rpM
Where,
- rRF is the risk free rate
- rpM is the market risk premium
r = 0.08 + 1.4 * 0.035
r = 0.129 or 12.9%
Using the price formula for DDM above, we can calculate the price today to be,
P0 = 2.2 * (1+0.18) / (1+0.129) + 2.2 * (1+0.18)^2 / (1+0.129)^2 +
[(2.2 * (1+0.18)^2 * (1+0.08)) / (0.129 - 0.08)] / (1+0.129)^2
P0 = $57.6722 rounded off to $57.67