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tensa zangetsu [6.8K]
3 years ago
12

Southern Foods just paid an annual dividend of $2.10 a share. Management estimates the dividend will increase by 11 percent a ye

ar for the next four years. After that, the annual dividend growth rate is estimated at 3.5 percent. The required rate of return is 11 percent. What is the value of this stock today?
Business
1 answer:
sveticcg [70]3 years ago
6 0

Answer:

Value of stock today = $37.3738

Explanation:

Provided details we have,

Dividend just given = $2.10

Dividend at end of Year 1 = $2.10 + 11% = $2.331

Dividend at end of Year 2 = $2.331 + 11% = $2.5874

Dividend at end of Year 3 = $2.5874 + 11% = $2.872

Dividend at end of Year 4 = $2.872 + 11% = $3.188

Dividend in 5th year = $3.188 + 3.5% = $3.299

Value of share at end of 4th year = \frac{D_5}{K_e - g}

= \frac{3.299}{0.11 - 0.035} = $43.987

Therefore value of share today shall be:

Year       Present Value factor @11%      Return  Present Value

1                  0.9009                             $2.331         $2.099998

2                  0.8116                              $2.5874      $2.099934

3                  0.7311                               $2.872       $2.0997192

4                  0.6587                              $3.188        $2.0999356

4                  0.6587                          $43.987         $28.9742

Net Present Value i.e. Value of stock today = $37.3738

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Answer:

Interest rates

Explanation:

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Disposable income is either saved or consumed. When interest rates fall, savings would fall as returns on investment would be lower and consumption would increase.When interest rates rise, savings would increase and consumption would fall

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If the supplies on hand at the end of January totaled $500 and the Supplies on Hand account before adjustment is $900, what shou
Natali5045456 [20]

Answer:

The adjustment at month-end is :

Supplies Expense $400 (debit)

Supplies $400 (credit)

Explanation:

The Supplies Account is an asset Account that decreases as the supplies are used in the business.

The use of supplies prompts the recognition of an <em>expense</em> and de-recognition of an <em>asset</em> as follows :

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3 years ago
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Usimov [2.4K]

Answer: please find the explanation column for answers

Explanation:

journal entry to record the sales transaction of a merchandising company:

Date        Account                           Debit           Credit

Apr 1      Account receivables        $5,400

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To record cost of goods sold

 Apr 1           Cost of merchandise sold       $3,240

          Merchandise inventory                                   $3,240

2. To record sales  return of goods.

Date        Account                           Debit           Credit

 Apr 4             Sales Return       $620.00  

  Account Receivable                                $620.00

Cost of merchandised returned

Apr 4  Merchandise Inventory        $372.00  

 Cost of Goods Sold                                     $372.00

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Date        Account                           Debit           Credit

Apr 8      Account Receivable $2,200.00  

                     Sales                                             $2,200.00

To Record cost of merchandise Sold

Apr 8    Cost of Goods Sold             $1,540.00  

Merchandise Inventory                                        $1,540.00

 

4.Journal to record payment received from sales of merchandise

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Apr 11     Cash                   $4,780.00  

Account receivable                                            $4,780.00

Calculation

Amount due from Apr 1 st sale less than return on April 4 =Account receivables - Sales Return=   $5,400- $620=$4,780.00

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