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777dan777 [17]
3 years ago
7

Assume that Burger Queen Inc. hired you as a consultant to help estimate its cost of capital. You have obtained the following da

ta: D0 = $0.80; P0 = $26.00; and g = 6.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings? 9.26% 9.14% 8.87% 8.54% 8.48%
Business
1 answer:
Anna35 [415]3 years ago
8 0

Answer:

The cost of equity capital is 9.26%

Explanation:

Using the DCF approach we usually calculate the price of stock or fair value of stock at a certain period in time based on the dividends the company is expected to pay. If the price today is provided then we can calculate the missing figure if any when other variables are provided.

The formula for DCF with constant growth model is,

P0 = D0*(1+g) / r - g

Where r is the required rate of return.

26 = 0.8*(1+0.06) / r - 0.06

26 * (r-0.06) = 0.848

26r - 1.56 = 0.848

26r = 0.848 + 1.56

r = 2.408 / 26

r = 0.0926 or 9.26%

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Deffense [45]

Answer:

The correct answer is option C.

Explanation:

The points on the production possibility curve show the efficient utilization of resources. The points below the curve show attainable but inefficient bundles. This is because the points below the curve imply that resources are not fully utilized and there are still some excessive resources left.

The points above the curve show those bundles that are unattainable. This is because these bundles need more resources to be achieved.

3 0
3 years ago
On january 3, 2013, persoff corporation acquired all of the outstanding voting stock of sea cliff, inc. In exchange for $6,000,0
konstantin123 [22]

Answer:

It is a wholly owned subsidiary so the Income Statement will include the figures of both the companies in the consolidated Income Statement. However the equity side of Balance Sheet will include share capital of only the parent company and include retained earnings of both the companies, assets will added up of the two companies and reported in the Balance Sheet however goodwill of the subsidiary will also be reported and liabilities will also be added up and reported in a same manner.

Explanation:

Because the data is not completely provided a general idea is provided here:

It is a wholly owned subsidiary so the Income Statement will include the figures of both the companies in the consolidated Income Statement. However the equity side of Balance Sheet will include share capital of only the parent company and include retained earnings of both the companies, assets will added up of the two companies and reported in the Balance Sheet however goodwill of the subsidiary will also be reported and liabilities will also be added up and reported in a same manner.

3 0
3 years ago
A co-worker who has to leave work early to deal with a personal matter asks that you complete some time-sensitive paperwork and
stich3 [128]

Answer:

intervene and tell the supervisor you had assumed responsibility for the paperwork and forgot

Explanation:

The golden rule is based on a principle of reciprocity and it states that one should treat others the way they want to be treated.

Different religions overtime have the same principle embedded in their doctrines.

In the given scenario where a coworker told you to compete some work for him before leaving and you failed to do so, when the coworker is being reprimanded you should take responsibility for the paperwork and say you forgot.

This is only fair on your coworker seeing it wasn't his fault the work was not done.

Also when you treat people fairly you can also be expected to be treated fairly too.

4 0
3 years ago
P7j, a chain of discount stores across the united states, has many store brands including wire, a line of sports shoes. wire is
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<span>A reduction in pricing does not necessarily increase overall revenue earned from a product.

Thank you for posting your question here at brainly. I hope the answer will help you. Feel free to ask more questions.
</span>
8 0
3 years ago
Apollo Corp. reported the following balance​ sheet: Cash ​$28,000 ​ Accounts payable ​$5,000 Accounts receivable ​15,000 ​ Notes
avanturin [10]

Answer:

Apollo's return on equity is 38.17%

Explanation:

The formula to compute the return on equity is shown below:

Return on equity = Net income ÷ total equity

where,

Net income = $50,000

And, the total equity is

= Common stock + retained earnings

= $10,000 + $121,000

= $131,000

Now put these values to the above formula  

So, the value would equal to

= $50,000 ÷ $131,000

= 38.17%

3 0
3 years ago
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