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Rama09 [41]
3 years ago
11

• Company X is paying an annual dividend of $1.35 and has decided to pay the same amount forever. How much should you pay for th

e stock, if you want to earn an annual rate of return of 9.5% on this investment? • You want to purchase common stock of Company X and hold it for 9 years. The company just announced they will be paying an annual cash dividend of $6.00 per share for the next 9 years. How much should you pay for the stock, if you will be able to sell the stock for $28 at the end of nine years and you want to earn an annual rate of return of 11% on this investment?
Business
1 answer:
dimaraw [331]3 years ago
5 0

Answer:

Case 1

Price of share = $14.21

Case 2

Price of share = $44.17

Explanation:

Provided details,

We have the following,

Current dividend = $1.35

Growth rate = 0

Annual rate of return = 9.5%

Using dividend growth model value of share,

\frac{D_1}{K_e - g} = P_0

Where D1 = Dividend at year end

Ke = Cost of capital or expected return

P0 = price of share

g = growth rate

Thus P0 = \frac{1.35}{0.095 - 0} = $14.21

In case 2, we have,

Dividend per share = $6.00 For a period of 9 years

Expected return = 11%

Growth rate = 0

Sale price at end of year 9 = $28

Present value annuity factor for 9 year @ 11%

= 5.537

Present value of Dividend = $6 \times 5.537 = $33.22

Discounted value of $28 for 9 years = 0.391 {tex]\times[/tex] $28 = $10.95

As, the share will be sold after 9 years, the price will be discounted to current value.

Total present value of share = $44.17

Thus, current price = $44.17

Case 1

Price of share = $14.21

Case 2

Price of share = $44.17

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Project Management Practice ProblemBragg’s Bakery is building a new automated bakery downtown Sandusky. Here are the activities
pav-90 [236]

Answer:

a. The normal project length is 36 weeks.

b. The critical path in this project is A-C-E-F.

c. The activity that you choose to crash first to reduce the duration of the project by one week is E because it has the least expediting cost/week amongst A, C, E, F.

d. The project length if all activities are crashed to their minimum is 23 weeks.

e. The slack for activity D is 5 weeks.

Explanation:

a) The normal length of the project = completion time of last activity = 36 weeks.

b) The criteria for critical activity:

LC_{i} = ES_{i} ,\\LC_{j} = ES_{j} ,\\

ES_j - ES_i = LF_j - LF_{i} = duration of the activity

where ES = Earliest start time, EF = Earliest finish time , LC = latest completion time, LF = latest finish time ,

The suffix- i refers to the preceding node, suffix-j refers to the succeeding node.

activities satisfying above all criteria are A, C, E, F

therefore critical path is A-C-E-F.

c) To reduce the project duration by 1 week. we should choose to crash among critical activities A, C, E, F. thus we choose to crash activity E because it has the least expediting cost/week amongst A, C, E, F.

d) if we crash all the activities to their minimum, then the project length = sum of crash time of all critical activities

= [6 + 10 + 6 + 1]

= 23 weeks.

e) The slack of activity d = LS - ES = 34 - 29

= 5 weeks

The critical path is given in the diagram,

7 0
3 years ago
The accounts payable account is listed in the chart of accounts as an asset.<br> True<br> False
mafiozo [28]

Answer:

False

Explanation:

Payables are payment the business is expected to make. Money comes from the company and goes to third parties. Payables represent goods and services obtained from suppliers, but payments have not been made. They are debts that the business owes others.

Because payables are money that the business owes others, they are listed as liabilities. Liabilities are the debts that a business acquires as it engages in its regular activities. Assets are the items of value that a business own. Payables are not assets as they are financial obligations the company is expected to meet.

6 0
3 years ago
A price support is a type of _____.
maw [93]
<span>a.price floor 

Where the government fixes the minimum retail price</span>
7 0
3 years ago
Read 2 more answers
Hours of labor or number of workers are commons ways of measuring a comapany's?
Andrej [43]
Productivity, hope this helps:)
7 0
3 years ago
Tinker Company reported sales revenue of $500,000 and total expenses of $450,000 (including depreciation) for the year ended Dec
uranmaximum [27]

Answer:

Net Cash inflow from operating activities $67,000

Explanation:

The computation of the net cash flow from operating activities is shown below:

Net Income ($500,000 - $450,000) $50,000

Add: Depreciation $10,000

Add: Decrease in account receivable $5,000

Less: Increase in inventory ($4,000)

Add: Increase in account payable $6,000

Net Cash inflow from operating activities $67,000

4 0
3 years ago
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