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nirvana33 [79]
3 years ago
9

Kellogg pays $2.00 in annual per share dividends to its common stockholders, and its recent stock price was $82.50. Assume that

Kellogg’s cost of equity capital is 5.0%. Estimate Kellogg’s expected growth rate based on its recent stock price using the dividend discount model with increasing perpetuity. Do not round until your final answer. Round answer to one decimal place (ex: 0.0245 = 2.5%).
Business
1 answer:
n200080 [17]3 years ago
8 0

Answer:

2.52%

Explanation:

Given that

Annual dividend paid per share = $2

Recent stock price = $82.5

Cost of capital = 5.0%

So, the expected growth rate is

Price = Recent dividend × (1 + growth rate ) ÷ (cost of equity - growth rate)

58.73 = $2 * (1 + Growth rate) ÷ (0.05 - Growth rate)

After solving this, the expected growth rate is 2.52%

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cornelius owns grand games, a high-end store that retails games and toys that are handcrafted and carefully selected. cornelius
Nitella [24]

All of Cornelius’s activities are aimed at giving grand games a sustainable competitive advantage through <u>strategic positioning.</u>

  • Strategic positioning simply refers to the methods that a business can use in distinguishing itself from its competitors. It is the decision taken by a firm on how to serve the customers and deliver quality products to them.

  • Based on the information given, Cornelius owns a high-end store that retails games and toys that are handcrafted and carefully selected. Also, Cornelius targets customers who value artisanal work, this is referred to as strategic positioning.

In conclusion, the correct option is strategic positioning.

Read related link on:

brainly.com/question/24979995

8 0
3 years ago
During the year, Belyk Paving Co. had sales of $2,560,000. Cost of goods sold, administrative and selling expenses, and deprecia
scoundrel [369]

Answer:

Net income -$268,000

Operating Cash Flow $511,000

Explanation:

A. Calculation for the Net income

INCOME STATEMENT

Sales $2,560,000

Cost of goods sold $1,364,000

Other expenses $685,000

Depreciation $477,000

EBIT $34,000

Interest $302,000

Taxable income -$ 268,000

($34,000-$302,000)

Taxes (24%) 0

Net income -$268,000

CALCULATION FOR EBIT

Sales $2,560,000

LESS:Cost of goods sold ($1,364,000)

Other expenses ($685,000)

Depreciation ($477,000)

EBIT $34,000

Based on the information given we were told that we should ignore any tax loss which was why Taxes (24%) was $0

The taxes are zero since we are ignoring any carryback or carryforward provisions.

Therefore NET INCOME is -$268,000

B. Calculation for operating cash flow

Using this formula

Operating Cash Flow = EBIT + Depreciation - Taxes

Let plug in the formula

Operating Cash Flow= $34,000 + $477,000 - 0

Operating Cash Flow = $511,000

Therefore Operating Cash Flow is $511,000

3 0
3 years ago
If you were to illegally reproduce for a profit a likeness or exact replica of a copyrighted logo, you would commit
tamaranim1 [39]

Answer:

copyright infringement

Explanation:

Copyright infringement is a broad term that refers to any kind of harm to someone's copyright, which includes copying a company's logo for profit. A logo, like any other visual product, is the legal possession of an individual or company, therefore it is illegal to copy it for your own business goal or profit.

5 0
3 years ago
Suppose an economist tests the theory that when the price of leather increases, fewer pairs of shoes are produced. He observes m
Salsk061 [2.6K]

Answer:

b. cannot test his theory because his observations violate the ceteris paribus assumption

Explanation:

As per the law of supply, when price of an input rises, quantity supplied of a good falls, keeping other factors affecting supply as constant (ceteris paribus).

Leather and Shoes are complimentary goods in the sense that leather serves as an input for the product i.e shoes. So if the price of leather rises, production of shoes would fall, keeping other factors constant.

When the price of an input rises, the quantity supplied falls, keeping other factors affecting supply as constant.

In the given case, the price of inputs has increased and yet the production of shoes has increased owing to an advancement in the technology. Technology is a different determinant of quantity supplied and considered as an other factor affecting supply.

5 0
3 years ago
You consider buying a share of stock at a price of $21. The stock is expected to pay a dividend of $2.04 next year, and your adv
just olya [345]

Answer:

E. None of the above

Explanation:

First we need to calculate the holding period return

Holding period return is the rate of return which an assets earns during the period in which it holds the assets.

Holding Period Return = (Selling Price - Initial Price + Dividend ) / Initial Price

Holding Period Return = ($24 - $21 + $2.04 ) / $21 = 0.24 = 24%

Now we need to calculate the expected return on the stock using CAPM formula as follow

Expected return = Risk free rate + Beta ( Market Risk Premium )

Expected return = rf + beta ( E(rm) )

Placing values in the formula

Expected return = 8% + 1.2 ( 16% )

Expected return = 27.2%

Abnormal return is the difference of Holding period return and expected return

Abnormal return = 27.2% - 24% = 3.2%

4 0
3 years ago
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