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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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Managerial accounting information for a company
Bad White [126]

Answer:

Correct answer is b. relates to subunits ot the entity and may be very detailed.

Explanation

Managerial accounting involves collecting, storing, analyzing, and reporting information about the operations, activities and finances of a business. These reports are generally used by the managers of a business, rather than by any external entities, such as shareholders or lenders. The purpose of this accounting is to facilitate manager from senior to line level to make informed decision.

So in order to run the business smoothly this information/accounting is required  to be very detail and covering each and every aspect of the entity.

5 0
3 years ago
A stock has an expected return of 11 percent, its beta is 1.20, and the risk-free rate is 4.4 percent. What must the expected re
Drupady [299]

Answer:

Expected market return = 9.8%

Explanation:

The expected return on the market can be worked out using the Capital Asset Pricing Model.

<em>The capital asset pricing model is a risk-based model. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta. </em>

Under CAPM, Ke= Rf + β(Rm-Rf)

Rf-risk-free rate (treasury bill rate)- 4.4%

β= Beta - 1.20

Rm= Return on market.- ?

Applying this model, we have

11%= 4.4%+ (R-4.4%)×1.20

0.11-0.044= 1.20×(R-0.04)

0.07 = 1.20R-0.048

Collect like terms

0.07+0.048 = 1.2R

Divide both sides by 1.20

R= (0.07+0.048)/1.20

R=9.83%

Expected market return = 9.8%

3 0
3 years ago
Kristoff Walker operates his own catering service. Summary financial data for February are presented in equation form as follows
wariber [46]

Answer:

- $17,600

Explanation:

The computation of the net decrease in cash during the month is shown below:

= $40,600 - $17,400 - $30,200 - $2,300 - $8,300

= - $17,600

After calculating the items which are presented in the column 1 represent the net decrease in cash for $17,600 amount.  

The net decrease in cash represents an outflow of cash. In this, the chances of loss may be higher than the loss.

8 0
3 years ago
Read 2 more answers
Suppose a three period weighted average is being used to forecast demand. Weights for the periods are as follows: 0.1, 0.4 and 0
nika2105 [10]

Answer:

$143

Explanation:

The computation of the demand forecast is shown below:

= Weightage × demand observed + Weightage × demand observed +  Weightage × demand observed

= 0.1 × 120 + 0.4 × 140 + 0.5 × 150

= $12 + $56 + $75

= $143

Basically we multiplied the weighatge with its demand observed so that the demand forecast could come

7 0
3 years ago
Ron Jones has been a trusted employee for over 10 years. He is responsible for ordering merchandise inventory, receiving the inv
ch4aika [34]

Answer:

Segregation of duties.

Explanation:

Segregation of duties -

The concept of segregation of duties is based on the shared responsibilities .

It refers to the method of assigning different person for different task , is referred to as segregation of duties .

It is the fundamental building block for running a business efficiently , in order to reduce any management risk .

In the business it is the major case of any fraud or error , as one person is responsible for maximum duties functioning in the business .

Therefore , it is import to divide various duties .

Hence , from the given scenario of the question,

The correct answer is segregation of duties .

5 0
3 years ago
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