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sveta [45]
3 years ago
7

Gruber Corp. pays a constant $7.55 dividend on its stock. The company will maintain this dividend for the next 15 years and will

then cease paying dividends forever. The required return on this stock is 11 percent. What is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
OlgaM077 [116]3 years ago
4 0

Answer:

The current share price is $54.29

Explanation:

Hi, to find the price of this share, we need to bring to present value all the future cash flow that this share will provide. Since the dividend is a constant dividend, we can find the price using the following equation.

Price=\frac{Div((1+r)^{n}-1) }{r(1+r)^{n} }

where:

r= required rate of return of the stock

Div = constant dividend (in our case, $7.55

n = years in which the share will provide dividends

Everything should look like this

Price=\frac{7.55((1+0.11)^{15}-1) }{0.11(1+0.11)^{15} }=54.29

So, the price of the stock today would be $54.29

Best of luck.

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Zepler [3.9K]

Answer:

Aftertax income     47,278.7

Explanation:

Sales 14,600 units at $14.30 (10%Δ)       208,780

Cost of goods sold (unchanged)        <u>   (116,800)   </u>

      Gross profit                                         91,980

S&A expenses; 5% of sales

208,780 x 5% =                                          (10,439)

Depreciation  (unchanged)                    <u>   (14,000)  </u>

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Taxes (30% of operating profit)             <u>    20,262.3  </u>

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8 0
3 years ago
59. A poultry rancher discovered that when she increased the price of organic eggs from $0.75 to $1.00 per dozen, the sales of h
oee [108]

Answer:

PED = -1.4 or |1.4| in absolute values, price elastic

Explanation:

the price elasticity of demand (PED) using the midpoint method:

PED = % change in quantity / % change in price

  • % change in quantity = {(Q 2 − Q1 ) / [(Q2 + Q1)/2]} x 100 = {(200 − 300 ) / [(200 + 300)/2]} x 100 =  -100 / 250 = -0.4
  • % change in price = {(P2 − P1 ) / [(P2 + P1)/2]} x 100 = {(1 − 0.75 ) / [(1 + 0.75)/2]} x 100 = 0.286

PED = -0.4 / 0.286 = -1.4 or |1.4| in absolute values

5 0
3 years ago
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Answer:

In the simple Keynesian model, inflation becomes a problem only if demand increases at full employment.

Explanation:

In the Keynesian view, price inflation is mainly the result of relative changes in supply and demand, which lead to price changes. Changes in the money supply have no direct influence here. According to this school, the money supply is the result of money creation by the banking system; but this plays only a limited role in the process.

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- Demand inflation: Inflation occurs when the aggregated demand for goods and services increases, with an initially constant supply.

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Answer:

$404,000

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Overheads includes all indirect cost incurred to product the units to be sold. Indirect costs are those costs which are not directly traceable / attributable to the product. These cost are variable and fixed.

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Budgeted production in November = (180,000 x 10% ) + 135,000 - 14,000 = 139,000

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Variable overhead = 139,000 x 5 X 0.5 = $347,500

Total budgeted Overhead = $347,500 + $56,500 = $404,000

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