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Reil [10]
3 years ago
9

Orwell building supplies' last dividend was $1.75. Its dividend growth rate is expected to be constant at 19.00% for 2 years, af

ter which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price
Business
1 answer:
Contact [7]3 years ago
5 0

Answer:

$38.74

Explanation:

Div₀ = $1.75

Div₁ = $2.0825

Div₂ = $2.4782

Div₃ = $2.6269 and grow at a 6% constant rate forever

required rate of return = 12%

using growing perpetuity formula to determine the terminal value of the stock in year 2 = $2.6269 / (12% - 6%) = $43.78

the stock's current price = $2.0825/1.12 + $2.4782/1.12² + $43.78/1.12² = $1.86 + $1.98 + $34.90 = $38.74

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Answer: 40 types

Explanation:

From the question, we are informed that a company wants to market different types of shampoo using color-coded bottles, lids, and label print and that the company has four different colors of lids, five different colors of bottles, and two different colors of print for the label available.

To calculate the different types of shampoo that the company can package, we use the multiplication principle. This will be:

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Answer with Explanation:

The decision making under the conditions of uncertainty:

Uncertainty is an unquantifiable outcome of a decision that can not be mathematically modeled whereas risk is a quantifiable outcome of a decision that can be mathematically modeled.

The expected value method helps in decision making related to uncertainty are making prudent estimates of cash flow by using expected value.

Expected value considers every outcome under uncertainty and computes all of the expected value for each outcome. The outcome that gives highest expected value is said to be best case and likewise the outcome that gives lowest expected value is said to be worst case.

Suppose that two projects gives the same expected value, then the decision will be based on the degree of uncertainty which means the project that has lowest uncertainty of returns will be our choice.

The deviation of the expected value from required return on a project can be measured as a Degree of uncertainty that helps in understanding to what extent the return will be not as per the expectation. The Precise Measurement of uncertainty can be calculated by inclusion of standard deviation to estimate expected value of the decision taken.

The expected money value is the monetary value that a particular decision will generate. In expected monetary value the decision is based on the weighted average of best case and worst case. The value derived is average thus the standard deviation would be very low which means that the calculation was precise. Decision trees are used in precise measurement of cash flow related to each expected outcome and deriving a weighted average value.

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3 years ago
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tekilochka [14]

Answer:

B. Depreciation allocates replacement values as part of the matching of revenues and expenses.

Explanation:

Depreciation allocates replacement values as part of the matching of revenues and expenses is not entirely true about depreciation accounting.

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