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loris [4]
3 years ago
14

Company B is expected to pay a dividend of $2 per share at the end of year 1 and the dividends are expected to grow at a constan

t rate of 4 percent forever. If the current price of the stock is $20 per share, calculate the expected return (i.e., the cost of equity capital for the firm)
Business
1 answer:
4vir4ik [10]3 years ago
6 0

Answer:

The answer is 14%

Explanation:

This will be solved by Dividend discount model based approach

re = D1/Po + g

where re is the rate of return

D1 is expected dividend($2)

Po is the current market value of equity($20)

g is the expected growth rate of dividend(4% or 0.04)

2/20 + 0.04

0.1 + 0.04

= 0.14

Expressed as a percentage is

0.14 x 100

14%

Therefore, the expected return is 14%

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You purchase 4,000 bonds with a par value of $1,000 for $978 each. The bonds have a coupon rate of 7.7 percent paid semiannually
drek231 [11]

Answer:

The amount to be received onthe coupon date is $154000.

The amount to be received at bonds maturity is $4154000.

Explanation:

amount received on the next coupon date = 4000*$1000*7.7%*6/12

                                                                       = $154000

amount to receive when the bonds mature = face value + interest

= 4000*$1000 + $154000

= $4,000,000 + $154000

= $4154000

Therefore, the amount to be received onthe coupon date is      $154000 and the amount to be received at bonds maturity is $4154000.

7 0
3 years ago
Assume that a lessor applies the five criteria to a lease involving equipment and determines that a lease should be classified a
Vaselesa [24]

Answer:

Debit to Lease receivable for the sum of the cash payments over the term of the lease.

Explanation:

Lease payments are classified as an asset receivable to the lessor in the future. Hence we debit lease receivable.

4 0
3 years ago
Alcott's preferred stock pays a dividend of $1.00 per quarter. If the price of the stock is $45.00, what is its nominal (not eff
harina [27]

Answer:

= 8.89%

Explanation:

T<em>h rate of return on a preferred stock is the dividend divided by the price of the stock multiplied by 100</em>

<em>Return = Dividend/price × 100</em>

Quarterly dividend = $1

<em>Annual dividend </em>

= 1 × 4 ( Note there are four quarters in year)

= $4

<em>Annual rate of  return</em>

= (4/45)× 100

= 8.89%

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3 years ago
Which of the following strategies is represented by McDonald’s experimenting with their traditional menu, as well as changing th
Harman [31]

Answer:

In the United States. McDonald’s spends the biggest slice of their budget. The company does many new product trials and innovation in its home country, where it has the biggest audience. The company’s advertising is typically skewed to children in the United States, where McDonald’s produces about 250 ads annually.

In Japan. The company’s ad campaigns are widely different. The Japanese ads are focused on adults as well as children, with some features that are unique to the locale’s culture.

6 0
3 years ago
Explain how an understanding of consumers' learning processes might affect marketing strategy planning. give an example.
Leokris [45]
Understanding the consumer's learning helps design a marketing strategy by identifying the patterns that can be created by the consumers. A business should learn to gather the common interest that they would want on a product which it can provide. Uniqueness, quality, and usability should be targeted so they can easily attract them. It can also be reinforced through advertisements that would draw them on acquiring the products. 
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