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Anna35 [415]
3 years ago
6

"Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because

the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $10 per share 10 years from today and will increase the dividend by 5 percent per year thereafter. If the required return on this stock is 11.5 percent, what is the current share price
Business
1 answer:
zhuklara [117]3 years ago
6 0

Answer:

The price per share today will be $57.758

Explanation:

The price per share will be calculated using the constant growth model of the DDM as the dividends will grow at a constant rate forever. However, as DDM is only applicable for a dividend paying company and as the dividend is paid from Year 10 and on wards, we will adjust the DDM formula to calculate the price at Year 9 and discount it back using required rate of return to calculate the price today. The formula for price under constant growth model is,

P0 = D1 / r - g

Where D1 is the dividend in year 1 or next period to calculate price today. As we use the next period's dividend, to calculate the price at year 9, we will use D10 that is $10 per share.

The price at year 9 will be given by this equation,

P9 = 10 / (0.115 - 0.05)

And as we require price today, we will discount it back 9 years. So the price today will be,

P0 = (10 / (0.115 - 0.05) / (1+0.115)^9

P0 = $57.758

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During September 2022, Carla Vista Diner’s total liabilities decreased by $69000 and its stockholders’ equity increased by $1000
Over [174]

Answer:

assets reduced by $59,000

Explanation:

To solve the problem we use the accounting formula.

Asset= Total liabilities + owner's equity

Since we are dealing with change in asset, liability, and equity

Change in asset = change in liability + change in owner's equity

Change in asset= -69,000 + 10,000

Change in asset= - 59,000

This implies that the company's assets reduced by $59,000

3 0
3 years ago
When using ABC, costs can be gathered at different levels. These levels are all of the following except:_________.
Aleksandr [31]

Answer:

B. Journal entry-level

Explanation:

When using ABC, costs can be gathered at different levels. These levels are all of the following except "journal entry-level".

Therefore, costs can be gathered in Unit-level, Batch-level, Factory-level and even Product level.

Activity-Based Costing (ABC) is actually a costing method which tends to identify the activities that are carried out in organization and gives the costs of each activity to the products and services by what they actually consume.

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3 years ago
New shale gas deposits are found in North Dakota :
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Answer and Explanation:

When the deposits with respect to new shale gas found in north dakota so there would be the both shifts i.e. long run  aggregate supply and the short run aggregate supply

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Therefore the same would be considered and relevant too

3 0
3 years ago
Expenses paid and recorded as assets before they are used are called.
attashe74 [19]

Answer:

Prepaid expenses

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Going 'long' (including more periods) on a moving average forecast is usually most appropriate when: 1. Significant fluctuations
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2. Significant fluctuations in the market would actually be corrected
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