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Masteriza [31]
3 years ago
5

Item 15Item 15 Gee-Gee's is going to pay an annual dividend of $2.05 a share next year. This year, the company paid a dividend o

f $2 a share. The company adheres to a constant rate of growth dividend policy. What will one share of this common stock be worth six years from now if the applicable discount rate is 11.2 percent
Business
1 answer:
meriva3 years ago
6 0

Answer:

$27.33

Explanation:

For computing the one share of the common stock after six years from now first, we have to determine the price of the common stock which is shown below

Price of the common stock = Next year dividend ÷ (Required rate of return - growth rate)

= $2.05 ÷ (11.2% - 2.50%)

= $23.56

The growth rate is

= ($2.05 - $2) ÷ ($2)

= 2.50%

Now the one share of the common stock after six years is

= $2 × 1.025^7 ÷ (11.2% - 2.50%)

= 2.3773715073  ÷ 8.7%

= $27.33

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A monopolist produces a. more than the socially efficient quantity of output but at a higher price than in a competitive market.
irina [24]

Answer:

B

Explanation:

First, a monopoly produce less than the socially efficient quantity because as the figure shows, the quantity produced is determined by the intersection between the marginal cost curve (MC) and the marginal revenue curve (MR) and not by the intersection between the MC and the demand. For instance, there is a deadweight loss (shown by the figure).

Second, equilibrium price is always higher than in a competitive market because is always higher than the MC. The price is determined by the equilibrium quantity (found before) and the demand. Also, there are barries to entry and so monopolist have always price control.

4 0
3 years ago
James would like to deposit enough money in a savings account to have $8,000 at the end of year 3. Assuming the investment will
faltersainse [42]

Answer:

  $6910.70

Explanation:

At the end of each year, the account balance will be 1.05 times the value at the beginning of the year. Thus, at the end of year 3, the value is 1.05^3 times the original value.

  $8000 = (deposit)×1.05^3

  deposit = $8000/1.05^3 ≈ $6910.70

James should deposit $6910.70 today.

7 0
3 years ago
The Walthers Company has a semi-annual coupon bond outstanding. An increase in the market rate of interest will have which one o
professor190 [17]

Answer:

The answer is D.

Explanation:

An increase in the market rate of interest of a bond will decrease the market price of the bond. Market rate of interest of a bond is inversely related to the market price of the bond.

For example, A bonds is issued with a higher interest rate, the price of existing bonds will fall because the demand for this bond falls.

6 0
3 years ago
He georgetown, south carolina, traffic division reported 40% of high-speed chases involving automobiles result in a minor or maj
stellarik [79]

Answer: The probability that 25 or more out of 50 high speed chases result in minor or major accidents is 0.097807364  or 9.781%.

The rate of accidents at 0.40 is a constant rate, and hence we can use the binomial distribution to calculate the probability.

The formula for computing the probability with the binomial distribution is:

P(X=x) = _{n}C_{x}*p^{x}*q^{n-x}

where

N  is number of trials  = 50

p is probability of of a hit in a single trial. In this case, p = 0.40

q is probability of of a miss in a single trial. Now q = 1 - p; q = 1 - 0.4 = 0.6 for this question

x will take on the whole numbers from 25  and continue upto 50

The questions asks us to compute the probability that 25 or more chases will result in an accident.  

We express this as P( X≥ 25) mathematically.

We can also express P( X≥ 25)  as P (x=25) + P(x=26) + ................ + P(50) i.e the sum of all the individual probabilities when x assumes each of the values from 25 upto 50.

That's why x will take on each of the whole numbers from 25 to 50.

We can compute P( X=25) by substituting the values in the formula above.

P(X=25) = _{50}C_{25}*0.4^{25}*0.6^{50-25}

P(X=25) = \frac{n!}{x!*(n-x)!}*0.4^{25}*0.6^{50-25}

P(X=25) = \frac{50!}{25!*(50-25)!}*0.4^{25}*0.6^{50-25}

P(x=25) = 0.040463604

Similarly we need to compute the probabilities for x =26, 27 and so on until x =50. The sum total of all these probabilities the answer.

The workings have been made in excel and are attached to this answer as a picture.

4 0
3 years ago
Hodgkiss Mfg., Inc., is currently operating at only 92 percent of fixed asset capacity. Current sales are $780,000. Fixed assets
EleoNora [17]

Answer:

$17,835.90

Explanation:

Currently Hodgkiss is operating at 92% of its fixed asset capacity, so they have an spare 8% to grow without adding any more fixed assets: ($780,000 / 92) x 100 = $847,826.09.

So they need to add fix assets in to increase its production by $32,173.91 (= $880,000 - $847,826.09).

Every dollar spent in fixed assets generates at full capacity $1.8039 in production output (= $847,826 / $470,000).

If they want to increase production by $32,174, they will need to spend $17,835.90 in fixed assets.

4 0
3 years ago
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