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LUCKY_DIMON [66]
3 years ago
14

Mayfield Inc. will pay a dividend of $3.14 per share next year. The company pledges to increase its dividend by 3.7 percent per

year indefinitely. If you require a return of 10 percent on your investment, how much will you pay for the company's stock today
Business
1 answer:
bulgar [2K]3 years ago
7 0

Answer:

The price that will be paid for the stock today is $49.84

Explanation:

The company is expected to grow the dividends at a constant rate, thus the constant growth model of DDM will be used to calculate the price of the stock today. The formula for the price of the stock is:

P0 = D1 / r - g

Where,

  • D1 is the dividend expected for the next period
  • r is the required rate of return
  • g is the growth rate in dividends

P0 = 3.14 / (0.1 - 0.037)

P0 = $49.84

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Data related to the inventories of Costco Medical Supply are presented below: Surgical Equipment Surgical Supplies Rehab Equipme
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Answer:

$117

Explanation:

Costco Medical Supply's merchandise inventory:

                  Surgical equip.  Surgical supplies  Rehab equip.  Rehab  supplies

Selling price          $276              $134                   $354                    $152

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Cost to sell               $17                 $17                      $16                       $7

Net realizable V.   $259              <u>$117</u>                   $338                    $145  

 

If we apply the lower of cost or net realizable rule for determining the value of surgical supplies, its value would be: $117 < $136

When we use the lower of cost or net realizable rule, we should value our inventory at the lowest value between original purchase cost and current net realizable value of the products.

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