Answer:
The answer is: $12.32
Explanation:
Dee's stock can be considered a perpetuity with a negative growth rate. So we can use the following formula to calculate the value of Dee's stock:
price of Dee's stock = dividend / (discount rate - growth rate)
where:
- dividend = $1.94
- discount rate = 0.145
- growth rate = -0.0125
price of Dee's stock = $1.94 / [0.145 - (-0.0125)] = $1.94 / (0.145 + 0.0125) =
$1.94 / 0.1575 = $12.32
Answer:
C. The additional investment in net operating working capital required to operate the project, even if that investment will be recovered at the end of the project's life.
Answer:
$44.12
Explanation:
For computing the current share price first we have to determine the price of the stock which is shown below:
Price of the stock = Next year dividend ÷ (Required rate of return - growth rate)
where,
Next year dividend equal to
= $12.25 + $12.25 × 5.25%
= $12.25 + 0.643125
= $12.893125
So, the price of the stock is
= $12.89 ÷ (13.25% - 5.25%)
= $12.89 ÷ 8%
= $161.1640625
Now the current share price is
= Present value of the dividend + present value of the price of stock
= $12.25 ÷ (1 + 13.25%)^11 + $161.1640625 ÷ (1 + 13.25%)^11
= $44.12
Answer:
Explanation:
(a) The computation of the cost of goods sold is shown below:
= Beginning inventory + Purchase of new merchandise - ending inventory
= $4,000 + $22,000 - $4,500
= $21,500
(b) In the income statement, the total revenues and the total expenses are recorded.
If the total revenues are more than the total expenditure then the company earns net income
And, If the total revenues are less than the total expenditure then the company have a net loss
This net income or net loss would reflect in the statement of the retained earning account.
The preparation of the income statement is presented in the spreadsheet. Kindly find the attachment below: