1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
hoa [83]
3 years ago
14

Sultan Services has 1.2 million shares outstanding. It expects earnings at the end of the year of $6.0 million. Sultan pays out

60% of its earnings in total: 40% paid out as dividends and 20% used to repurchase shares. If Sultan's earnings are expected to grow by 5% per year, these payout rates do not change, and Sultan's equity cost of capital is 10%, what is Sultan's share price?A) $60.00 B) $12.00 C) $36.00 D) $24.00
Business
1 answer:
Kisachek [45]3 years ago
5 0

Answer:

A) $60.00

Explanation:

to calculate the value of Sultan's stocks, we need to use the growing perpetuity formula:

stock price = dividend / (required return rate - growth rate)

  • dividend = ($6,000,000 x 60%) / 1.2 million shares = $3,600,000 / 1.2 million shares = $3 per share
  • required return rate = 10%
  • growth rate = 5%

stock price = $3 / (10% - 5%) = $3 / 5% = $60 per share

You might be interested in
Periodic review systems are best suited for the C category of items under the ABC classification scheme.
sveticcg [70]

Answer:

a. True

Explanation:

ABC classification scheme refers to item analysis that is based upon the principle that there are many less critical items and few critical items by dividing on-hand inventory into three classes which is generally based upon annual dollar volume as follows:

"A items" have very tight control and accurate records

"B items" does not have a tight control and good records

"C items" have minimal records, periodic review, and and characterized by simple controls.

From the above explanation, it is therefore <u>true</u> that periodic review systems are best suited for the C category of items under the ABC classification scheme.

7 0
3 years ago
Cuanto terminos hay en el polinomio abcd+e-h2
Evgen [1.6K]
Do you have to answer in Spanish?
4 0
3 years ago
On December 2, Coley Corp. acquired 1,600 shares of its $3 par value common stock for $21 each. On December 20. Coley Corp. reis
shusha [124]

Answer:

(A) Credit Additional Paid in Capital $9,600

Explanation:

As provided earlier, shares of own company were acquired, at a premium, which creates a treasury account with the amount of purchase back of shares.

This is because of the amount paid towards purchase that is for the amount received on purchase.

Further when shares are resold the paid in capital account is credited,

Additional capital to be credited = $11 - $3 = $8 per share

$8 \times 1,200 shares = $9,600

With this amount the balance of additional capital will increase, and thus this account will be credited.

If there is any reversal to treasury stock it will be treasury stock account debit, thus option b) and option d) are completely invalid.

Further cash received = $11 \times 1,200 = $13,200 and not $25,200

Therefore option c) is also invalid.

Therefore, Correct option is

(A) Credit Additional Paid in Capital $9,600

4 0
3 years ago
Determining the baseline performance occurs in the six sigma dmaic step known as:
kow [346]
Determining the baseline performance occurs in the six sigma dmaic step known as: measure
5 0
3 years ago
(Calculating the cash conversion cycle) Network Solutions just introduced a new, fully automated manufacturing plant that produc
forsale [732]

Answer and Explanation:

The computation is shown below:

a. As we know that

Cash conversion cycle is

= Days inventory outstanding + days sale outstanding - days payable outstanding

= 45 days + 25 days - 30 days

= 40 days

b. Now if the payment of supplier changed from 30 days to 50 days which is

Cash conversion cycle is

= Days inventory outstanding + days sale outstanding - days payable outstanding

= 45 days + 25 days - 50 days

= 20 days

c. Now the reduction in working capital is

= Difference in days × production × material cost per order

= 20 days × 2,000 × $50

= $2,000,000

We simply applied the above formulas

3 0
3 years ago
Other questions:
  • Factor Co. can produce a unit of product for the following costs: Direct material $ 7.70​ Direct labor 23.70​ Overhead 38.50​ To
    13·1 answer
  • Sandra, a manager at Evolve Corp, frequently engages her team in recreational activities. Every employee is friendly with one an
    5·1 answer
  • Danny is working to provide food, clothing, and shelter for his family. This is an example of which function of a family?
    15·1 answer
  • If during the year the portfolio manager sells all of the holdings of stock D and replaces it with 150,000 shares of stock E at
    8·1 answer
  • Silicon Valley in Northern California is famous as the home to many businesses that produce high-tech products or serve high-tec
    10·1 answer
  • The simple interest 500,000 amount to 630,000. what is the percentage rate?​
    12·1 answer
  • "?________ the owners of the factors of? production, while? ________ what amounts of those factors to hire."
    10·1 answer
  • If Patty Shoemaker estimates that her $400 weekly grocery bill will increase at an annual inflation rate of 5%, what should her
    13·1 answer
  • Moonbeam Company manufactures toasters. For the first 8 months of 2020, the company reported the following operating results whi
    13·1 answer
  • Gus decides to park his canmper in an empty overgrown lot and connects wires from his camper to an electric pole to obtain elect
    9·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!