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
A $63,000 machine with a 7-year class life was purchased 2 years ago. The machine will now be sold for $50,000 and replaced with
Nadusha1986 [10]

The initial outlay for the project after depreciation is loss of $26,700.

<h3>What is  depreciation?</h3>

Depreciation in accounting refers to two parts of the same concept: first, the real decline in fair value of an asset, such as the worth of factory equipment each year.

Depreciation is used to match the cost of a productive asset with a useful life of more than a year to the revenues received by employing the asset. The expense of an asset is frequently spread out throughout the years that it is used.

Section 32 of the Income Tax Act of 1961 contains the provision for authorising depreciation. Depreciation is a deduction allowed by the Income Tax Act for the reduction in the real worth of a physical or intangible asset used by a taxpayer.

To know more about  depreciation follow the link:

brainly.com/question/1203926

#SPJ4

7 0
2 years ago
An increase in the price of one good will have what effect on its complement?a. no effectb. increase in demandc. decrease in dem
Juliette [100K]

Answer: The correct answer is <u>"c. decrease in demand".</u>

Explanation: Complementary goods are all those products that depend on each other. That is, they are so closely linked that the behavior of one inevitably affects the behavior of the other.

The classic example of complementary goods is that of cars and gasoline. The sale of the former may be affected by an increase in the price of the latter; and, at the same time, the consumption of the second depends on the sale of the first.

7 0
4 years ago
Read 2 more answers
Consistency of behavior is an asset to an organization when the organization Group of answer choices Has an aggressive culture E
user100 [1]

Correct question: Consistency of behavior is an asset to an organization when the organization ________.

A) has an aggressive culture

B) encourages innovation and risk taking

C) is highly departmentalized

D) has an employee oriented culture

E) operates in a stable environment

Answer:

E, operates in a stable environment

Explanation:

Consistency of behavior is the tendency of a individual to behave in a way or manner that they are known to behave from the past.

This consistency of behavior helps to ensure that the individual makes the best decisions which optimally ensures success of organization. THe consistency of an indidvidual's behiour is dependent on the environment created by the ogranization. A stable environment ensures behavioural consistency while an unstable condition within an organization could bring about the opposite.

Cheers.

3 0
4 years ago
Marigold Corp. purchased machinery for $1260000 on January 1, 2017. Straight-line depreciation has been recorded based on a $840
stealth61 [152]

Answer: $267,300‬

Explanation:

The cash received will be:

= Net book value + gain

Net book value:

Annual depreciation = (1,260,000 - 84,000) / 5 years

= $‭235,200‬ per year.

Depreciation up until January 1, 2021 = ‭235,200‬ * 4

= $‭940,800‬

Depreciation up until May 1, 2021 = 940,800 + ( (235,200 / 12 months) * 4 months )

= ‭$1,019,200‬

Net book value = 1,260,000 - ‭1,019,200‬

= $‭240,800‬

Cash received = ‭240,800‬ + 26,500

= $267,300‬

3 0
3 years ago
The purpose of planning is setting goals and formulating operational plans to achieve those goals. Managers spend a great deal o
Ivanshal [37]

Answer:

e. program project

Explanation:

programming a project helps you to build a framework for timely executions of plans turning operational plans into goals

6 0
3 years ago
Other questions:
  • Equity refers to.
    15·1 answer
  • Oreva, a multinational corporation, pays $100,000 per year to an information technology firm to archive and secure all of its da
    14·1 answer
  • Someone who wants credentials in skilled training, but in less time than a four- year degree should consider...
    9·1 answer
  • Are morality &amp; ethics the same thing ?
    6·1 answer
  • Sheffield Corp. prepared a 2019 budget for 105000 units of product. Actual production in 2019 was 115000 units. To be most usefu
    11·1 answer
  • AudioCables, Inc., is currently manufacturing an adapter that has a variable cost of $0.50 per unit and a selling price of $1.40
    10·1 answer
  • Career pathways never overlap.<br> A. <br> True<br> B. <br> False
    9·2 answers
  • The cost of speeding relates crashed in 2008 accounted for per second
    11·1 answer
  • Write the president (me) a memo explaining your reasoning and suggest a new pricing strategy. (You can decide what kind of busin
    13·1 answer
  • Trader joe’s differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!