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lora16 [44]
3 years ago
13

Stoneworks, Inc., has an odd dividend policy. The company has just paid a dividend of $6 per share and has announced that it wil

l increase the dividend by $5 per share for each of the next five years, and then never pay another dividend. If you require a return of 15 percent on the company’s stock, how much will you pay for a share today?
Business
2 answers:
olga_2 [115]3 years ago
7 0

Answer:

$71.64

Explanation:

Price of a stock is the present value of all future cash flows receivable from the stock discounted at required rate or return

Present Value factor

= 1 / (1 + r) ^ n

Where,

r = Rate of return = 12% or 0.12

n = Years = 1 to 5

So, PV Factor for year 2 will be

= 1 / (1.12^2)

= 1 / 1.2544

= 0.797194

The following table in the attached file shows the calculations

So, the price of the stock today is $71.64

storchak [24]3 years ago
5 0

Answer:

$65.75

Explanation:

Share value can be determined by calculating the present value of all the dividend associated with the share. The Present value can be calculated by discounting the each years dividend using required rate of return.

As $6 Dividend is paid now and it will increase by $5 each year for next five years

Dividend for each year are

First year dividend = $6 + $5 = $11

Second year dividend = $11 + $5 = $16

Third year dividend = $16 + $5 = $21

Forth year dividend = $21 + $5 = $26

Fifth year dividend = $26 + $5 = $31

Present value of each year dividend:

First year dividend = $11 x ( 1 + 15% )^-1 = $9.57

Second year dividend = $16 x ( 1 + 15% )^-2 = $12.10

Third year dividend = $21 x ( 1 + 15% )^-3 = $13.81

Forth year dividend = $26 x ( 1 + 15% )^-4 = $14.86

Fifth year dividend = $31 x ( 1 + 15% )^-5 = $15.41

As we know Sum of present values of all the future dividends is the value of the share,

Value of Share = $9.57 + $12.10 + $13.81 + $14.86 + $15.41 = $65.75

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3 years ago
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Gitano Products operates a job-order costing system and applies overhead cost tojobs on the basis of direct materialsused in pro
IgorLugansk [536]

Answer:

$3,400

Explanation:

The computation of predetermined overhead rate for the year is shown below:-

Predetermined Overhead Rate = Estimated Manufacturing Overhead ÷ Estimated Allocation Base × 100

= $119,600 ÷ $92,000 × 100

= 130%

2. The computation of the amount of underapplied or overapplied overhead for the year is shown below:-

Overhead Applied = (Opening Value of Direct Material + Purchase of Direct Material - Closing Value of Direct Material) × Predetermined Overhead Rate

= ($24,000 + $140,000 - $17,000) × 130%

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= $191,100

Overhead Incurred = $106,300 + $8,000 + $18,000 + $15,000 + $8,200 + $39,000

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Underapplied overhead = $194,500 - $191,100

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6 0
3 years ago
"Dream, Inc., has debt outstanding with a face value of $4 million. The value of the firm if it were entirely financed by equity
Artist 52 [7]

Answer:

expected bankruptcy costs =  $190000

Explanation:

given data

face value = $4 million

equity = $18.6 million

stock outstanding = 510000 shares

sell price = $31 per share

corporate tax rate = 35 percent

to find out

decrease in the value of the company due to expected bankruptcy costs

solution

we get here value of levered firmed by M & M proportion

value of levered firm = value of equity + value of debit

value of levered firm = $18.6 million + 35% ( $4 million)

value of levered firm = $20 million

and

now we get total market value of firm that is

total market value of firm = market value of equity + market value of debit

total market value of firm = $31 ( 510000 ) +  $4 million

total market value of firm = $19810000

so expected bankruptcy costs are here as

expected bankruptcy costs =  $20 million - $19810000

expected bankruptcy costs =  $190000

7 0
3 years ago
You were recently hired by RLM Inc. It is your job to prepare reports and analyze financial information related to the company.
Alex73 [517]

Answer:

d. management

Explanation:

Based on the job tasks described within the question it seems that you were recently hired as a management accountant. This role focuses on (like mentioned in the question) preparing reports and analyzing as much financial information as possible in order to best inform yourself, so that you can help you make the best and most strategic decisions for the organization. Which seems to by why RLM Inc. has hired you.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

4 0
3 years ago
During 2020, Sarasota Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Sarasota for
vfiekz [6]

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

Gross profit = Sales - Cost of goods sold

= (440 x 90 + 220 x 80 + 264 x 50) - (440 x 56.7 + 220 x 50.4 + 264 x 31.5)

= (39,600 + 17,600 + 13,200) - (24,948 + 11,088 + 8,316)

= 70,400 - 44,352

= $26,048

Ending inventory schedule attached in the excel archive

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

Download xlsx
8 0
3 years ago
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