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Artist 52 [7]
3 years ago
11

Wilmur Corporation has announced that it will pay its first annual stock dividend of $1.05 per share exactly two years from toda

y. Analysts estimate that this dividend will grow by 1.5% per year in perpetuity and that the stock has a discount rate of 6%. What is the present value of a share of SETAB stock if you value it based on the discounted dividends investors expect to receive
Business
1 answer:
Novay_Z [31]3 years ago
5 0

Answer:

The price of the stock today is $22.012

Explanation:

The price of the share will be the value of its dividends discounted back to today's value. The constant growth model of the DDM approach will be used as the dividends will grow by a constant percentage in perpetuity. The formula for the constant growth model is,

P0 = D1 / r -g

As the company will pay no dividend in Year 1, D1 will be Zero. Wewill use D2 that will give us the value of stock one year from now. We will discount it back by 1+r to calculate the price today.

P0 = [1.05 / 0.06 - 0.015]  /  (1+0.06)

P0 = $22.012

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Answer:

B. Place the order now.

Explanation:

Why wait until the exchange rate changes?  When is that going to be?  The best reaction would be to place the order when it is needed and not to speculate on the exchange rate.  Waiting until the exchange rate changes against Japan makes the prices of goods and services cheaper for foreign purchasers.  But, the wait could be endless.

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EcoFabrics has budgeted overhead costs of $1,001,700. It has allocated overhead on a plantwide basis to its two products (wool a
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Answer and Explanation:

a. The computation of overhead rate using activity-based costing is shown below:-

Cutting = Cost ÷ Machine Hours

Cutting = $381,600 ÷ 228,000

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Design = $620,100 ÷ 1,710

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The computation of the amount of Overhead Allocated is shown below:-

Wool:

114,000 × $1.67

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= $413,398

Total = $603,778

Cotton:

114,000 × $1.67

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= $206,669

Total = $397,049

The computation of amount allocated using traditional approach is shown below:- = $1,001,700 ÷ 2

= $500,850

Overhead Allocated to Wool = $500,850

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QUESTION 3 Project governance does NOT include Setting standards for project selection. Overseeing project management activities
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