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vichka [17]
3 years ago
7

Northern Gas recently paid a $2.80 annual dividend on its common stock. This dividend increases at an average rate of 3.8 percen

t per year. The stock is currently selling for $26.91 a share. What is the market rate of return
Business
2 answers:
MAXImum [283]3 years ago
7 0

Answer:

14.6%

Explanation:

we can use the Gordon growth  model to determine the market rate of return (or required rate of return for this stock or similar ones):

current stock price = dividend / (required rate of return - growth rate)

  • current stock price = $26.91
  • growth rate = 3.8%
  • dividend in 1 year = $2.80 x 1.038 = $2.9064

$26.91 = $2.9064 / (RRR - 3.8%)

RRR - 3.8% = $2.9064 / $26.91 = 10.8%

RRR = 10.8% + 3.8% = 14.6%

BARSIC [14]3 years ago
6 0

Answer:

The market rate of return is 14.6%

Explanation:

In this question, we are asked to calculate the market rate of return for a stock having a particular selling rate at present.

Mathematically, the market rate of return =

[Current dividend * (1+growth rate)]/current stock price + growth rate

From the question, we identify the following;

Current dividend = $2.80

Growth rate = 3.8% = 0.038

Current price of stock = $26.91

We plug this values in the equation and we have the following;

Market rate of return = [$2.80 * (1+0.038)]/26.91 + 0.038 = [(2.8*1.038)/26.91] + 0.038 = 0.108 + 0.038 = 0.146 or 14.6%

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I would say C

Explanation:

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3 years ago
Mercury Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $150,000 was sold for its book value
shutvik [7]

Answer:

Mercury Company

Sale of Equipment account:

Equipment           $150,000

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Book value            $38,000

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Explanation:

a) Data and Calculations:

Equipment Account:

Beginning balance $750,000

Ending balance        600,000

Sale of equipment $150,000

Accumulated Depreciation - Equipment account:

Beginning balance     $500,000

Depreciation expense    40,000

Ending balance             428,000

Sale of Equipment       $112,000

b) The Cash received from the sale of Mercury Company's equipment is equal to the book value in Year 2 according to the question.  Since the book value (value after accumulated depreciation) is $38,000, that means that the equipment was sold at $38,000 recording no profit or loss for the company on the sale.

3 0
3 years ago
A corporate coupon bond of 6.9 percent is callable in five years for a call premium of one year of coupon payments. Assuming a p
bagirrra123 [75]

Answer:

$1,069

Explanation:

Data provided in the given question

Future value = $1,000

Coupon bond = 6.9%

Time period = 5 years

The computation of price paid is shown below:-

Amount Paid = Principal Amount + Call premium

= $1,000 + 6.9% × $1,000

= $1,069

Therefore, for calculating the amount paid we simply add principal amount add call premium.

3 0
3 years ago
GDP includes a. final goods and inventories of imported intermediate goods. b. intermediate and final goods to count all goods a
Elina [12.6K]

Answer: c. only final goods to avoid double counting when including intermediate goods

Explanation:

The Gross Domestic Product (GDP) is an economic measure that aims to quantify the strength of an economy by checking it's Economic Activity.

When Calculating GDP, the FINAL value of goods and services produced WITHIN a country are the only amounts included to avoid Double Counting of products.

For example, if in making a television, the company making the TV bought electrical parts for $100 and the LED screen for $50 with labour costs of $50 and then sold it to a store for $300 that then sells the Television at $500, $500 is the amount that is included in GDP calculation. None of those other figures will be added again because they are already implicitly included in the final $500.

6 0
3 years ago
____ is a planning process falling under the Project Integration Management knowledge area. Schedule development Develop project
lianna [129]

Answer:

Develop project management plan

Explanation:

Project integration management is the coordination of all aspects of a project. It involves coordination of the following: tasks, stakeholders, resources, along with any issues arising from parties in the project, evaluating resources, and making choices between different lines of action.

So developing a project management plan is a process that fall under integration management as defined.

3 0
3 years ago
Read 2 more answers
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