Answer:
The correct answer to this is pure play.
Explanation:
Pure play is a method ,which is used to determine the beta coefficient , for a company which is not traded publicly. This approach is also used to calculate the cost of capital for a project, that is different from the mainstream business that a company is in. Here the cost of capital can be determined by taking out the levering ( both un and re levering ) beta coefficient of pure play. While a pure play company is said to be that company which focuses only on the product which it specializes in.
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Answer:
$31.82
Explanation:
market price $50
expected rate of return /Re) = 14%
Div = $50 x 14% = $7
risk free rate (Rf) = 6%
market premium (Rm - Rf) = 8.5%
beta = ?
14% = 6% + (beta x 8.5%)
beta x 8.5% = 14% - 6% = 8%
beta = 8% / 8.5 = 0.941
if beta doubles to 1.882, then Re will be:
Re = 6% + (1.882 x 8.5%) = 22%
new market price of the stocks = $7 / 22% = $31.818 = $31.82
Answer:
- Dr Dividends Declared 12,300
- Cr Dividends Payable 12,300
Explanation:
First we must determine how many shares are outstanding:
23,000 shares issued - 5,000 shares held= 18,000 shares outstanding
Then we multiply shares outstanding times dividends per share:
18,000 shares outstanding x $0.70 per share = $12,300
- Dr Dividends Declared 12,300
- Cr Dividends Payable 12,300
Answer:
B) Rearrange the production floor.
Explanation:
First step is to calculate the manufacturing labor costs for the Current operations and new proposal
Calculation for the manufacturing labor costs for the Current operations
Current operations manufacturing labor costs =5 workers * 2,100 hours * $8.00
Current operations manufacturing labor costs = $84,000
Calculation for the manufacturing labor costs for the new proposal
New Proposal manufacturing labor costs=4.5 workers *2,000 hours * $9.00
New Proposal manufacturing labor costs = $81,000
Based on the above calculation the decisions that the management should accept is to REARRANGE THE PRODUCTION FLOOR if they want to reduce the company manufacturing labor costs reason been that the manufacturing LABOR COSTS for the current operations is $84,000 which means it is higher than the manufacturing LABOR COST for the new proposal which is $81,000
Therefore the management should REARRANGE THE PRODUCTION FLOOR because with the new proposal manufacturing labor costs will reduce.
