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Arisa [49]
3 years ago
10

Will Co. is expected to pay a dividend of $2 per share at the end of year 1(Div1), and the dividends are expected to grow at a c

onstant rate of 4 percent forever. If the current price of the stock is $20 per share, calculate the expected return or the cost of equity capital for the firm.
Business
1 answer:
Lerok [7]3 years ago
8 0

Answer:

Expected return or the cost of equity capital for the firm = 14%

Explanation:

V(0) = D1 / r - g

v = 20, D1 = 2, r = ?, g = 0.04

20 = 2 / (r - 0.04)

20r - 0.8 = 2

20r = 2 + 0.8

20r = 2.8

r = 2.8/20

r = 0.14

r = 14%

Note: Application of constant growth dividend discount model was required to solve the question

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Answer:

b. 5.75

Explanation:

Times Interest earned ratio is the measure of ability of a company to pay the interest on its debts. It is the ratio of earning before interest and tax and interest expense as below.

Times Interest Earned Ratio = Earning before interest and tax / Interest Expense

Times Interest Earned Ratio = $86,250 / $15,000

Times Interest Earned Ratio = 5.75 times

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Answer: B) Conservative Financial Policy

Explanation:

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2 years ago
Which platform is an employment website that helps job seekers to locate new job opportunities?
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All of the following should generally be included as taxable income on Schedule 1 (Form 1040), line 21, EXCEPT: Reimbursement re
Lapatulllka [165]

Answer:

Answer is Option 2: Life insurance proceeds received after the death of a spouse.

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Answer:

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Not long ago and until today, the work is done during the day, that is, Monday through Friday; A reality for most people. However, much of the economic activity, both ours and the entire world, operates 24/7. Today, millions of workers have unpredictable schedules. This is especially common in jobs related to services and retail sales. For example, many chain stores use personnel algorithms with traffic and apparently this makes sense, but shareholders always expect efficient efforts to maximize profits. If not, however difficult it is, particularly for workers, to get another job.

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