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horrorfan [7]
2 years ago
5

Shackleford corporation net income this year is $800,000. The company generally retains 35% of net income for reinvestment. the

company's common equity currently has a book value of 5,000,000. they just paid a dividend of $1.37, and the required rate of return on this stock is 12%. compute tha value fo this stock if dividends are expected to continue growing indefinitley at the comoanys interal growth rate
A. $22.61

B.$15.63

C. $11.42

D. $4.35
Business
1 answer:
ZanzabumX [31]2 years ago
4 0

Answer:

A. $22.61

Explanation:

First,

find the growth rate(g);

g = ROE *retention  rate

retention  rate = 35%

ROE = Net income/value of equity

ROE = 800,000/5,000,000 = 0.16

Therefore, g = 0.16*0.35

g =0.056 or 5.6%

Price = \frac{D0(1+g)}{(r-g)}

D0 = Recently paid dividend

g = growth rate

r = required return

Price = \frac{1.37(1.056)}{0.12-0.056} \\ \\ =\frac{1.44672}{0.064} \\ \\ =22.605

Therefore, the value of this stock is $22.61

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Compared to rail transportation, one of the advantages of shipping by truck is that trucks "Can reach more destinations".

<h3>What is rail transportation and road transportation?</h3>
  • Rail transportation: Train travel is another name for rail travel. It is a mode of transportation that uses cars that travel on tracks (rails or railroads). It is one of the most significant, frequently used, and highly affordable methods of transportation for both people and products across long and short distances.
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1 year ago
Assume the following data for Oshkosh Company before its year-end adjustments:
babunello [35]

Answer:

a. Dr Sales $619,200

Cr Customer Refunds Payable $619,200

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Cr Cost of Merchandise Sold $400,000

Explanation:

a. Preparation of the journal entry to record Estimated customer refunds and allowances

Dr Sales $619,200

($51,600,000 × 1.2%)

Cr Customer Refunds Payable $619,200

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Dr Estimated Returns Inventory $400,000

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Answer:

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Explanation:

As per the data given in the question,

Merchandise inventory = Balance of purchases on 21 April

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= $32,864

Calculating the ending inventory :

Details units

Ending inventory = beginning inventory + Purchase - Sale

Beginning inventory = 25 units

Add : Purchase made on

April 8  = 75 units

May 8 = 60 units

may 28 = 80 units

June 21 = 35 units

Total units for sale = 275 units

Less : Units sold on

April 11 = 40 units

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May 10 = 50 units

May 19 = 20  units

June 5 = 40 units

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Answer:

c. $ 84,000 increase

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The entry when the company wrote off uncollectible accounts:

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From 12/31/06 to 12/31/07, cash realizable value from the balance increase:

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