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Harlamova29_29 [7]
2 years ago
11

Cache Creek Manufacturing Company is expected to pay a dividend of $3.36 in the upcoming year. Dividends are expected to grow at

8% per year. The risk-free rate of return is 4%, and the expected return on the market portfolio is 14%. Investors use the CAPM to compute the market capitalization rate and use the constant-growth DDM to determine the value of the stock. The stock's current price is $84. Using the constant-growth DDM, the market capitalization rate is _________.
Business
1 answer:
Nutka1998 [239]2 years ago
6 0

Answer:

12%

Explanation:

Dividend Valuation method is used to value the stock price of a company based on the dividend paid, its growth rate and rate of return. The price is calculated by calculating present value of future dividend payment.

Formula to calculate the value of stock

Price = Dividend / ( Rate or return - growth rate )

$84 = $3.36 / ( Required Rate of return - 8% )

$84 = $3.36 / ( Required Rate of return - 0.08 )

Required Rate of return - 0.08  = $3.36 / $84

Required Rate of return - 0.08  = 0.04

Required Rate of return = 0.04 + 0.08

Required Rate of return = 0.12 = 12%

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Otion Inc. is a relatively new firm in the consumer electronics industry. The company's primary objective is to become the marke
muminat

Answer:

C) Internal production systems that could reduce costs by 30 percent below the current industry standards

Explanation:

VRIO can be defined as the tool used to analyze a firm’s <u>internal resources and capabilities</u> in relation to them being a source of sustained competitive advantage. It purports that organisations have to look inwards for development of competitive advantage.

VRIO is an acronym for a the four qualities that must be possessed if internal competencies must produce competitive advantage:  Value, Rarity, Imitability, and Organization.

Hence in the case of Otion Inc, the right resolve and direction is its <u>internal</u> production systems being able to reduce costs by 30% below industry standards.

The key word is internal.

7 0
3 years ago
Lean production should result in reduced inventories. If lean production is successfully implemented, the difference in net oper
harina [27]

Answer:

True

Explanation:

If lean production totally eliminates inventories, the net operating income computed under the absorption and variable costing methods should be equal.  If lean production only reduces inventories, then the difference in net operating income under the two methods will be reduced.

Lean production is a system of production that tries to eliminate bottlenecks in the flow of goods by employing tools like just in time (JIT), Kaizen, and the 5S of Sort, Set in Order, Shine, Standardize, and Sustain, among others.  It attempts to cut costs, reduce unnecessary inventory, shorten production cycle, speed response time, grant employees autonomy,  and reduce waste of resources while ensuring high quality and customer satisfaction.

Lean production employs some principles in order to achieve efficiency.  They are: 1) definition of value, 2) mapping the value stream, 3) creating efficient flow, 4) using a pull system, and 5) pursuing perfection in all aspect of production activities.  The Lean approach can be applied to services and other aspect of business, like system, structure, and organization.

3 0
3 years ago
PLEASE HELP ME URGENT
Irina-Kira [14]
The answer is C, good luck!
4 0
2 years ago
Read 2 more answers
The stated purposed of NAFTA is to A. gain membership in the WTO. B. reduce the outsourcing of jobs to foreign countries. C. pha
jekas [21]

Answer:

C. phase out all trade and tariff barriers among​ Canada, Mexico, and the U.S

Explanation:

The North American Free Trade Agreement (NAFTA)

This agreement creates a bloc of trade for the region, Canada, Mexico and the US.

As state on "C" It result in the elimination or reduction of barriers to trade and investment between the countries.

It will be replaced in the following year by the United States–Mexico–Canada Agreement (USMCA)

But NAFTA will keep working until this new agreement is finished.

4 0
3 years ago
A firm has a profit margin of 12 percent; total asset turnover of 0.55 and an equity multiplier of 2.2. What is the firm's ROA a
lutik1710 [3]

Answer:

ROA = 6.6%

ROE 14.52%

Explanation:

profit margin = net income / sale = 12%

assets turn over = sales / assets = 0.55

equity mutiplier = assets / equity = 2.2

ROE = return on equity = net income / equity

ROA = return on equity = net income / assets

we use the fraction properties to get ROE and ROA

\frac{income}{sales} \times \frac{sales}{Assets} =\frac{income}{Assets} \\ 0.12 \times 0.55 = 0.066\\

ROA = 6.6%

We apply the same property to get ROE

\frac{income}{assets} \times \frac{assets}{equity} =\frac{income}{equity} \\ 0.066 \times 2.2 = 0.14252\\

ROE = 14.52%

6 0
3 years ago
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