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pav-90 [236]
3 years ago
15

Cullumber Corp. paid a dividend of $2.44 yesterday. The company’s dividend is expected to grow at a steady rate of 5 percent for

the foreseeable future. If investors in stocks of companies like Cullumber require a rate of return of 25 percent, what should be the market price of Cullumber stock? (Round dividend to 3 decimal places, e.g. 3.756 and round final answer to 2 decimal places, e.g. 15.25.)
Business
2 answers:
Y_Kistochka [10]3 years ago
8 0

Answer:

The market price is $12.81 per share.

Explanation:

The price of the stock today can be calculated using the constant growth model of DDM as the dividends are expected to grow at a constant rate. The formula to calculate the price of the stock under constant growth model is,

P0 = D1 / r-g

Where,

  • D1 is the Dividend for the next period or D0 * (1+g)
  • r is the required rate of return
  • g is the growth rate in dividends

P0 = 2.44 * (1+0.05)  /  (0.25 - 0.05)

P0 = $12.81

solong [7]3 years ago
4 0

Answer:

The market price of Cullumber stock should be $12.81.

Explanation:

To calculate the market price of Cullumber stock, we use the dividend discount model (DDM) formula stated as follows:

P = Next year dividend ÷ (r - g) ................................ (1)

Where,

P = stock market price = ?

Next year dividend = Do × (1 + 0.05) = $2.44  × 1.05 = $2.562

r = required return = 25% = 0.25

g = dividend growth rate = 5% = 0.05

These above values are now substituted into equation (1) as follows:

P = $2.562 ÷ (0.25 - 0.05) = $2.562 ÷ 0.20 = $12.81

Therefore, the market price of Cullumber stock should be $12.81.

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Answer:

The correct answer is letter "C": The process will help identify employee characteristics that will augment the firm's business strategy and increase the company's return on its staffing investment.

Explanation:

Job analysis is the study of the components needed to complete a job. Companies tend to use this approach to measure the investment necessary for units of production. Thus, in case an employee would like to convince top managers on reasons why to conduct a job analysis, the worker should focus informing the potential return the company could obtain in regards to the individual productivity of employees that could be increased if investing more in staffing.

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Because of its effect on the amount of capital per worker, in the short term an increase in the working population is likely to
Tamiku [17]

Answer:

The correct answer is letter "B": reduce productivity. Other things the same, this decrease will be larger in a poor country.

Explanation:

Labor productivity measures the units a worker can produce per hour. <em>Capital, technology, </em>and <em>human development</em> influence the labor productivity employees could have. Poor countries are characterized by having low investments. If the labor force increases but the capital remains stagnant, the level of productivity is likely to fall since there is a surplus in labor hand.

3 0
3 years ago
Bill is considering investing $450 at the end of every month in a fixed income instrument. He will receive $27,000 at the end of
Nikitich [7]

Answer:

11.61%

Explanation:

First, find the annual percentage return (APR) of this annuity. Using a financial calculator, input the following;

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Duration of investment ; N = 4*12 = 48 months

One -time present value; PV = 0

then compute interest rate; CPT I /Y= 0.92% (this is monthly rate)

APR = 0.92*12 = 11.035%

Effective Annual Rate (EAR) formula is as follows;

EAR = (1+\frac{APR}{m} ) ^m  -1

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EAR = 1.1161 -1

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8 0
3 years ago
A produce distributor uses 783 packing crates a month, which it purchases at a cost of $11 each. The manager has assigned an ann
jeyben [28]

Answer:

Annual Savings will be ;

Ordering Cost = $2,993.88

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Explanation:

First Calculate the Economic Order Quantity (EOQ)

EOQ = √ 2 × Annual Demand × Ordering Cost per Order / Holding Cost per unit

        = √ ((2 × 783× 12 × $31) / ($11 × 32%))

        = 407

Note : Currently the firm orders at 783 crates per month

Savings in Ordering Cost will be :

Savings = Ordering Cost at Current Quantity - Ordering Cost at EOQ

             = (Total Demand / Current Quantity × Ordering Costs) - (Total Demand / Current Quantity × Ordering Costs)

             = (9396/783 × $31) - (9396/407 × $31)

             = $2,993.88

Savings in Holding Cost will be :

Savings = (Current Quantity - Economic Order Quantity) / 2 × Holding Cost per unit

             = (783 - 407) / 2 × ($11 × 32%)

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4 0
3 years ago
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zepelin [54]

Answer:

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Explanation:

The computation of the asset turnover is shown below:

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= 3.76 times

By dividing the net sales from the average total assets, the asset turnover could arrive i.e 3.76 times

This is the answer but the same is not provided in the given options

8 0
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