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
Aneli [31]
3 years ago
8

You expect that Bean Enterprises will have earnings per share of $2 for the coming year. Bean plans to retain all of its earning

s for the next three years. For the subsequent two years, the firm plans on retaining 50% of its earnings. It will then retain only 25% of its earnings from that point forward. Retained earnings will be invested in projects with an expected return of 20% per year. If Bean's equity cost of capital is 12%, then the price of a share of Bean's stock is closest to:
A) $17.00

B) $10.75

C) $27.75

D) $43.50
Business
1 answer:
Varvara68 [4.7K]3 years ago
8 0

Answer:

C) $27.75

Explanation:

Earnings:

2.00 x 20% = 0.4 (2.00 + 0.40 = 2.40)

2.40 x 20% = 0.48 (2.40 + 0.48 = 2.88)

2.88 x 20% = 0.576 (2.88 + 0.576 = 3.456)

3.46 x 10% = 0.346 (3.46 + 0.346 = 3.806)

3.80 x 10% = 0.38 (3.80 + 0.38 = 4.18)

Dividends:  

3.46 x 50% = 1.73

3.80 x 50 % = 1.90

4.18 x 75% = 3.135 ( 50% + 25% = 75%)

P0 = 1.73/[(1.12)^4] + 1.90/[(1.12)^5] + (3.14/(0.12 - 0.05))/1.125

     = 27.63

Therefore, If Bean's equity cost of capital is 12%, then the price of a share of Bean's stock is closest to $27.75

You might be interested in
_____Web sites have job listings created for individuals who wish to perform work using trade-specific skills such as plumbing,
Artist 52 [7]
<span>Industry </span><span>Web sites have job listings created for individuals who wish to perform work using trade-specific skills such as plumbing, electrical, welding, teaching, agriculture, and so on. </span>
3 0
3 years ago
Read 2 more answers
Which statements about the offer are true? Check all that apply.
svp [43]

Answer:

there is no picture

Explanation:

4 0
3 years ago
Suppose that in a given month $40 million is deposited into the banking system while $50 million is withdrawn. Assume that the r
vladimir1956 [14]

Answer: Money Supply Decrease of $50 million.

Explanation:

$40 million was deposited while $50 million was withdrawn.

The net change in the banking system would therefore be,

= 40 - 50

= -$10 million

($10 million ) means that more money left than came in.

The money supply can be calculated as the net change multiplied by the money multiplier.

The Money Multiplier is denoted as 1/reserve requirement.

Change in Money Supply is,

= -10 million * 1/20%

= -$50 million

Going by the negative number it means that Money Supply reduces by $50 million.

8 0
3 years ago
15. Chef A insists that roux is the traditional thickener for bisque. Chef B insists that it's rice. Which chef is correct?
inna [77]

Answer:

Hi,

The correct answer option is B. Both chefs are correct

Explanation:

Roux is a mixture of fat and flour for making sauces.The purpose of roux is to form a base for the sauce and soup by thickening the sauce.Butter is commonly used for making roux.Veloute,a  common cuisine is thickened  with roux. Bisque is a soup made of pureed shellfish.Rice is used to thicken Bisque.This soup is smooth, creamy and seasoned.

Hope this helps!

3 0
3 years ago
Read 2 more answers
In digital forensics, all investigations follow the same basic methodology. which of the following should be performed first in
Xelga [282]
Had to look for the options and here is my answer. Based on digital forensics's basic methodology, the very first thing that should be done upon investigation is the identification of relevant items of evidentiary value or known as EM. Hope this answers your question.
8 0
3 years ago
Other questions:
  • market economies are distinguished from other types of economies largely on the basis of a. the political affiliations of govern
    13·1 answer
  • The last dividend paid by Coppard Inc. was $1.25. The dividend growth rate is expected to be constant at 15% for 3 years, after
    9·1 answer
  • What can be concluded if the number of movie tickets sold increases by 10 percent when the price is cut by 20 percent, other thi
    7·1 answer
  • Stagflation occurs when high inflation combines with...
    9·1 answer
  • Mark runs a home improvement business. He is happy with the level of business he receives, but he wants to learn more about his
    6·1 answer
  • A rent control law, where tenants pay below-market rents, is a market restriction that may induce a decrease in the supply of re
    5·1 answer
  • Payments on an installment note include the accrued interest expense plus a portion of the amount borrowed. Question 5 options:
    8·1 answer
  • Why is accounting a service industry?
    6·2 answers
  • For contracts that include more than one separate performance obligation: Multiple Choice Revenue is recorded over time at the f
    5·1 answer
  • MC Qu. 12-118 The company would report net cash... Net income$14,500 Cash dividends paid to stockholders 3,400 Cash proceeds fro
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!