<span>You are given an annual dividend of $2.10 for the fifteen years that you plan on holding it. Also, after 15 years, you are given to sell the stock for $32.25. You are asked to find the present value of a share for this company if you want a 10% return. You have to mind that the future stock for 15 years is $32.25. You are not only going to mind the present value of the annuity at $2.10 but also the $32.25.
With the interest of r = 10% and number of years of n = 15, we get
PVIFA = 7.6061.
For annuity we have,
$2.10 * 7.60608 = $15.973
For $32.35 with r = 10% and n = 15
PVIF = 0.239392
Thus for the present value of selling price,
$32.25 * 0.239392 = $7.720
Thus the present value of the share
P = $15.973 + $7.720
P = $23.693
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Answer:
a. Total liabilities = $280,000
b. Total liabilities = $250,000
Total equity -= $250,000
Explanation:
As we know that
Total assets = Total liabilities + shareholder equity
So in the first case
The amount of the liabilities is
Total liabilities = Total assets - Total equity
= $700,000 - $420,000
= $280,000
And, in the second case, the total assets is $500,000
And, the liabilities and equity amounts are equal to each other
So in this case, the liabilities is $250,000 and the equity is $250,000
Answer:
13%
Explanation:
As per the situation the solution of required rate of return first we need to find out the beta which is shown below:-
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
11% = 7% + Beta × 6%
Beta = 1
now If the market risk premium increased to 6% so,
The required rate of return = 7% + 1 × 6%
= 13%
Therefore for computing the required rate of return we simply applied the above formula.
Answer:
B) $23,000.
Explanation:
ABC's accumulated net income (or retained earnings) over the past four years = $8,000 + $5,000 + $12,000 + $10,000 = $35,000
ABC's accumulated dividends paid over the past four years = $3,000 x 4 = $12,000
Since dividends are paid using money that proceeds from retained earnings, the balance of the retained earnings account = accumulated retained earnings - accumulated dividends = $35,000 - $12,000 = $23,000
Answer:
The firm's cash flow to creditors during 2016 was -$131,000.
Explanation:
Cash flow to creditors
= Interest expense - (Ending LT Debt - Beginning LT Debt)
= $99,000 - ($1,680,000 - $1,450,000)
= -$131,000
Therefore, The firm's cash flow to creditors during 2016 was -$131,000.