Which of the following is a service-based business? (Select the best answer.)

The last dividend paid by Coppard Inc. was $1.25. The dividend growth rate is expected to be constant at 15% for 3 years, after

Kipish [7]

Answer:

Current stock price = $33.50

Explanation:

The Dividend Valuation Model(DVM) is a technique used to value the worth of an asset. According to this model, the value of an asset is the sum of the present values of the future cash flows would that arise from the asset discounted at the required rate of return.

Hence we will apply the model as follows:

For a single dividend :

PV = Future dividend × (1+r)^(-n)

Year PV

1 1.25× 1.15^1× 1.11^(-1) =1.295

2 1.25× 1.15^2× 1.11^(-2)= 1.342

3 1.25× 1.15^3× 1.11^(-3)= 1.390

Present of dividend in year 4 and beyond:

This wild determined in two steps as follows:

Step 1 :Present Value in year 3 terms

PV = A × D× (1+r)/(r-g)

(1.25× 1.15^3× 1.06)/(0.11-0.06)=40.30

Step 2 :Present value in year 0

PV in year 0 = 40.30× 1.11^(-3)= 29.469

Current stock price = 1.295 + 1.342 + 1.390+29.469 = 33.496

Current stock price = $33.50

4 0

3 years ago

A government issued general obligation bonds to finance the construction of a new fire station. In the current year, the governm

Crank

Answer: The correct answer is "Interest expenses of the governmental activities.".

Explanation: This amount will be reported on the government-wide statement of activities as interest expenses of the governmental activities since it corresponds to interest expenses paid for the issuance of debt to finance government activities.

3 0

2 years ago

Bacon Company makes four products in a single facility. These products have the following unit product costs: Products A B C D D

vredina [299]

Answer:

minutes of grinding= 60,468 minutes

Explanation:

Giving the following information:

Grinding minutes per unit:

Product A= 3.80

Product B= 5.30

Product C= 4.30

Product D= 3.40

Monthly demand in units:

Product A= 4,260

Product B= 4,260

Product C= 3,260

Product D= 2,260

A total of 54,900 minutes is available per month on these machines.

minutes of grinding= Total product A + Total product B + Total product C + Total product D

minutes of grinding=4260*3.80 + 4260*5.3 + 3260*4.3 + 2260*3.4= 60,468 minutes

8 0

2 years ago

Price elasticity for a good depends on the share of a consumer's budget spent on a good. Other things being equal, which of the

kvasek [131]

Answer:

Monthly Cell Phone Bill

Explanation:

Other things being equal, the higher the price of a good relative to a consumer's income, the greater the price elasticity of demand. Hence, the price elasticity of demand for low-priced items, such as thumbtacks and fish food, tends to be lower than the price elasticity of demand for relatively expensive items, such as monthly cell phone bill, that represent a more significant fraction of a consumer's annual income.

Be sure to consider not just the price, however, but also the overall portion of a consumer's annual income spent on an item. For example, one latte costs only $3.00, but for daily coffee drinkers the annual expense could be around $1,000. The elasticity of demand for lattes is therefore likely to be higher than that for other low-priced items (such as thumbtacks) that may need to be purchased only a few times annually.

4 0

2 years ago

You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equ

alexgriva [62]

Answer:

A. 8.15

Explanation:

WACC is the firm's weighted average cost for the capital that is employed from different sources which includes common equity, preferred equity and debt.

In order to calculate WACC, the weighted average cost of each capital is added, so the formula becomes:

WACC = (E x %E) + (D x (1 - Tax) x %D) + (PE x %PE)

E = Common equity

D = Debt

PE = Preferred equity

%E = Common equity / total capital

%D = Debt / total capital

%PE = Preferred equity / total capital

Tax = Tax rate

Interest on debt is a tax deductible expense therefore the interest rate is taken after accounting for tax in order to calculate WACC.

Calculation:

Using the above formula we can calculate WACC

WACC = (11.25% x 55%) + (6.5% x (1-40%) x 35%) + (6% x 10%)

WACC = 0.0815 or 8.15%

7 0

2 years ago