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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 perpetuity pays $100 each and every year forever. the duration of this perpetuity will be:_________
Scrat [10]

Perpetuity pays $100 each and every year forever. the duration of this perpetuity will be 12.11

Yield rate = 9% or 0.09

Duration of perpetuity = (1+ Interest Rate) / Interest Rate

                                  = 1+ 0.09 / 0.09

                                   = 1.09 / 0.09

                                    = 12.11

A perpetual annuity is a never-ending annuity or series of cash payments that lasts forever. True eternity is rare. For example, the UK government has issued them in the past. These were known as consoles and were all eventually redeemed in 2015. Cash flow is endless.

Learn more about perpetuity here: brainly.com/question/24261067

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7 0
2 years ago
Product J is one of the many products manufactured and sold by Oceanside Company. An income statement by product line for the pa
allochka39001 [22]

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

Variable Cost = Cost of Goods Sold × (100 - Estimate Percentage of Cost of Good Sold) + Operating Expenses × ( 100 - Operating Expenses Fixed Percentage)  

= 186,500 × (100 - 30%) + 85,750 × (100 - 40%)

= 186,500 × 70÷100 + 85,750 × 60÷100

= $130,550 + $51,450

= $182,000

Fixed Cost= Cost of Goods Sold × Estimate Percentage of Cost of Good Sold + Operating Expenses × Operating Expenses Fixed Percentage

= $186,500 × 30÷100 + $85,750 × 40÷100

= $55,950 + $34,300

= $90,250

Differential analysis

Particular  Product J continue   Product J discontinue  Difference on income

Sales             275,000                       0                      -275,000

Variable cost     182,000                       0                  182,000

Fixed cost    90,250                            90,250                        0

Income (Sales-Variable Cost-Fixed Cost) 2,750 -90,250 -93,000

According to the analysis, project J should not be discontinue because if project j discontinue variable cost doesn’t occur, but fixed costs still occur.

8 0
3 years ago
What is an example of a problem in the world today, not mentioned in the chapter, that has an economic dimension?
mr_godi [17]

Answer:

There are many of those problems. One of them is immigration. Naturally, there is a cost to receive thousands of people. The demographic figures are altered and as a consequence the labor fan grows, but the data shows that, although in the medium term the clearest results are seen, in a single year progress is also observed.

7 0
3 years ago
Determine the tax consequences to Euclid from the following independent events. Round the per share answer to the nearest cent.
Levart [38]

Answer:

$100 per share

Explanation:

Complete question: <em>As a result of the stock dividend, Euclid's per share basis is $?</em>

<em />

The Total stock is 500 shares for $50,000 Basis = 50,000 / 500 = $100

Hence, Euclid's per share basis is = $100 per share

8 0
3 years ago
Danny's workplace just started casual Fridays. What can Danny now wear to work on Fridays?
babunello [35]
A black suit and tie
8 0
3 years ago
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