Answer:
$109
$118.81
18.26%
Explanation:
Intrinsic value can be determined using the constant growth dividend model
according to the constant dividend growth model
price = d1 / (r - g)
d1 = next dividend to be paid
r = cost of equity
g = growth rate
dividend, growth rate and cost of equity are not given and they have to be calculated
growth rate = retention rate x ROE
Retention rate = 1 - payout ratio = 1 - 0.5 = 0.5 = 50%
0.5 x 18% = 9%
According to the capital asset price model: cost of equity = risk free + beta x (market rate of return - risk free rate of return)
9% + 2x (14% - 9%) = 19%
dividend = payout ratio x earnings per share
0.5 x $20 = $10
Intrinsic value = = $109
Stock price in a year
= 118.81
(dividend return + price return)
price return is the return on investment as a result of appreciation or depreciation of share price
Dividend return is the return on investment from dividend earned
price return = price at the end of the year - price at the beginning of the year
Answer:
A) Management by objective
Explanation:
Based on the information provided within the question it can be said that Throneberry’s approach is consistent with the principles of Management by objective. This is an approach that focuses on training individuals with clearly defined objectives that are agreed upon by both management and employees in order to increase performance. Which is what Throneberry Manufacturing is doing by training the employees to complete a single objective daily in order to increase efficiency in production.
Answer:
1. Calculation of Break Even:
Break Even = Fixed Cost / Contribution per Unit
Fixed Cost = $6,000
Contribution per Unit = Selling Price - Variable cost per unit
Contribution per Unit = $50 - 20 = $30
Break Even = 6,000 / 30
Break Even = 200 trips
2. Monthly Operating profit required = $9,000
Tax Rate = 25%
Before Tax Profit Required = 9,000 / (1-Tax rate)
Before Tax Profit Required = 9,000 / (1 - 0.25) = $12,000
Trips required to sell to earn a monthly operating profit of $9,000 after taxes = (6,000 + 12,000) / 30
Trips required to sell to earn a monthly operating profit of $9,000 after taxes = 600
Trips required to sell to earn a monthly operating profit of $9,000 after taxes = 600 trips
Answer:
C. In a pure fixed cost structure, the unit selling price and unit contribution margin are equal.
Explanation:
In Accounting, cost behavior is an indication of how costs in a firm reacts to change in activity levels. There are basically three types of cost behavior; fixed costs, variable costs and semi-variable costs.
The relationship between cost behavior and profits are;
- A pure fixed cost structure offers more security if volume expectations are not achieved.
- In a pure variable cost structure, when revenue increases by $1, so do profits.
- A pure variable cost structure offers higher potential rewards.
Answer:
The correct answer is D. learning to stand alone is part of growing up.
Explanation: