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lbvjy [14]
4 years ago
5

Teall Development Company hired you as a consultant to help them estimate its cost of capital. You have been provided with the f

ollowing data: D1 = $1.45; P0 = $22.50; and g = 6.50% (constant). Based on the DCF approach, what is the cost of equity from retained earnings?
Business
1 answer:
katrin [286]4 years ago
5 0

Answer:

Cost of Equity 12.9%

Explanation:

Cost of Equity is the rate of return required by the equity holders of the company. It is rate which is associated with the equity of the company. This can be calculated by using Discounted cash flow method of valuation of equity because this rate is used to discount the expected future dividend of related to equity.

Value of Equity = Dividend paid / ( rate of return - growth rate )

P0 = D1 / ( r - g )

$22.5 = $1.45 / ( r - 6.5%)

r - 6.5% = $1.45 / $22.5

r - 0.065 = 0.064

r = 0.064 + 0.065

r = 12.9%

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A graph titled Funding for House Elections 2011 to 2012 shows parties on the horizontal axis and dollars (hundreds of millions)
slavikrds [6]

Answer: Both parties are dependent on raising huge sums of money to fund their House campaigns.

Explanation:

Campaigning for office is no cheap endeavour as many politicians have seen and noted. Money needs to be spent on everything from renting venues to buying stationary and so the politicians turn to donors to help.

Regardless of party affiliation, this is the reality for political campaigns which is why both parties rely on huge sums of money to fund campaigns like for the U.S. House of Reps. This is confirmed by the graph described above that shows the hundreds of millions of dollars being used to campaign for the House.

8 0
3 years ago
Read 2 more answers
Hurren Corp. makes a product with the following standard costs per unit of output: Standard Quantity Standard Price Direct mater
Ostrovityanka [42]

Answer:

the labor rate variance is $4,050 unfavorable

Explanation:

The computation of the labor rate variance is shown below:

= Actual hours × (standard rate - actual rate)

= 4,500 hours × ($19 per hour - $19.90 per hour)

= $4,050 unfavorable

Hence, the labor rate variance is $4,050 unfavorable

5 0
3 years ago
Dianne Doolittle wants to download an itemized invoice for the QuickBooks Online subscriptions on her wholesale billing account
ANTONII [103]

Answer:. CSV and PDF

Explanation:

QuickBooks is an Accounting software that was developed to mainly help small to medium size companies maintain a proper accounting system.

The Wholesale billing option enables the owner to pay the subscription for the clients that they moved to the wholesale billing list.

When downloading an itemized invoice for this there are 2 file formats that QuickBooks permits people to use which are CSV and PDF file formats.

6 0
3 years ago
With double-digit annual percentage increases in the cost of health insurance, more and more workers are likely to lack health i
pochemuha

Answer:

See attached files

Explanation:

3 0
4 years ago
newspaper publisher uses roughly 800 feet of baling wire each day to secure bundles of newspapers while they are being distribut
tresset_1 [31]

Answer:

Explanation:

Reorder point quantity is the level at which an inventory is expected to be restocked , calculated by finding the sum of demand over the lead time and the safety stock days

Daily usage = 800 feet / day

Lead time = 6 days

Desired service level = 95%

Risk level = 1-0.95 =0.05

safety stock at 0.05 = 1800

Reorder point = expected demand  in (LT) + safety stock

= (800*6) + 1800

= 4800+1800 = 6600 feet.

3 0
3 years ago
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