1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
zvonat [6]
3 years ago
5

The Quick Buck Company is an all-equity firm that has been in existence for the past three years. Company management expects tha

t the company will last for two more years and then be dissolved. The firm will generate cash flows of $800,000 next year and $1,250,000 in two years, including the proceeds from the liquidation. There are 35,000 shares of stock outstanding and shareholders require a return of 13 percent.
Required:
a. What is the current price per share of the stock?
b. The Board of Directors is dissatisfied with the current dividend policy and proposes that a dividend of $910,000 be paid next year. To raise the cash necessary for the increased dividend, the company will sell new shares of stock.
c. How many shares of stock must be sold?
d. What is the new price per share of the existing shares of stock?
Business
1 answer:
Vika [28.1K]3 years ago
5 0

Answer and Explanation:

a. The computation of the current price per share is shown below:

Current price per share = Value of Firm  ÷ Number of stock outstanding

where,

Value of Firm is

= $800,000 ÷ 1.13 + $1,250,000  ÷ 1.13^2

= $1,686,897.96

And, the number of outstanding shares is 35,000 shares

So, the current share price is

= $1,686,897.96 ÷ 35,000 shares  

= $48.20

c. The computation of the shares of stock sold is shown below:

No of shares of stock must be sold is

= ($910,000 - $800,000) ÷ 48.20

= $2,282.16

c. The computation of the new price per share of stock is shown below:

Current price per share = Value of Firm  ÷ Number of stock outstanding

where,

Value of Firm is

= $910,000 ÷ 1.13 +  $1,250,000 ÷ 1.13^2

= $1,784,243.09

And, the number of outstanding shares is 35,000 shares and $2,282.16

So, the current share price is

= $1,784,243.09  ÷ 35,000 shares  + $2,282.16

= $47.86    

You might be interested in
As a company grows, it may become necessary for it to create an ______
viva [34]

<u>Answer:</u>

<em>As a company grows, it may become necessary for it to create an </em><u><em>Organizational chart</em></u><em> which is a visual display of the organizational structure which contains lines of authority (chain of command),  staff relationships,  permanent committee arrangements, and lines of communication.</em>

<em></em>

<u>Explanation:</u>

The organization chart is a chart indicating the connection of one department graphically to another, or others, of an organization. It is additionally used to show the relationship of one office to another, or others, or of one capacity of an association to another, or others.  

Using the organization chart continuously, show the "structure of a business", government, or other association. Organization diagrams have an assortment of employments and can be organized from multiple points of view.

4 0
3 years ago
One method of managing stress is finding a way to reduce the hindrance stressors encountered on the job. In your group, describe
horrorfan [7]

Explanation:

Stress in the work environment can occur due to several factors, such as excessive pressure, long working hours, conflicts with colleagues and superiors, inadequate salary, insecurity, etc.

It is a factor considered the evil of the century, due to the high competitiveness in the market and faster and faster economic changes, which ends up increasing the company's expectation regarding the employee.

It is important for organizations to adopt a posture that focuses on the needs of employees, so that they are able to measure the level of job satisfaction and implement measures that reduce stress factors in the workplace.

It is also important that the worker seeks to manage his stress through small attitudes, such as establishing a list of tasks, managing his time, seeking to have a better relationship with co-workers, avoiding procrastination, etc.

5 0
3 years ago
James Grunig, professor emeritus of public relations at the University of Maryland, listed the following possible objectives for
madam [21]

Answer: See explanation

Explanation:

According to James Grunig, professor emeritus of public relations at the University of Maryland, the five possible objectives for a communicator are:

• Message Exposure - This refers to situation when the intended people get exposed to the message that is being shared. Here, materials are provided to the mass media by the PR personel.

• Accurate dissemination of message - Messages must be passed across and communicated as clearly as possible without giving out false information or witholding back some information which is vital for the accuracy of the information delivered.

• Acceptance of the message - The message passed must be accepted by the person that's being addressed.

• Attitude change - There must be an attitude change after the message has been delivered as these shows acceptance and products should be purchased.

• Change in overt behavior - Overt behavior is openly seen and hence, there will be change in overt behavior and the goods will be purchased.

3 0
2 years ago
A food product is pulled from the consumer market after preliminary testing, before data conclusively proves that it causes panc
raketka [301]

Answer:

The precautionary principle

Explanation:

7 0
3 years ago
Why markets can only supply private goods efficiently?
kirill [66]
<span>Private good is a product and/or service produced by a private business and purchased to increase the utility and/or productivity of the buyer. The majority of the goods and services consumed in a market economy are private goods, and their prices are determined by the market forces of supply and demand. Private goods are both excludable and rivalrous, where excludability means that producers can prevent some people from consuming the good or service based on their ability or willingness to pay and rivalrous indicates that one person's use of a product reduces the amount available for use by another. In practice, private goods exist along a continuum of excludability and rivalry and can even show only one of these traits.</span>
7 0
3 years ago
Other questions:
  • Effective annual rate considers the effect of compounding, whereas annual percentage rate does not consider the effect of compou
    10·1 answer
  • Teams at Systech Corp. come from many different countries, with skills ranging from creativity to communication to search engine
    12·1 answer
  • At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead in
    9·1 answer
  • Which statement is a PRIMARY characteristic of a capitalist system?
    12·2 answers
  • Soon after becoming the new manager of operations at the Cooper Motors, a local car dealership, Finn discovers that employees ar
    15·1 answer
  • Flagg records adjusting entries at its December 31 year-end. At December 31, employees had earned $12,000 of unpaid and unrecord
    11·1 answer
  • Addresses do not change if you copy them to a different cell
    6·1 answer
  • Strieby Corp. operates a business with three separate entities as subsidiaries that operate as a unitary business: Matty Corp.,
    12·1 answer
  • Solving for PMT of an annuity​) To pay for your​ child's education, you wish to have accumulated ​$ at the end of years. To do t
    12·1 answer
  • What do you think is the most important skill a judge can possess
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!