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
Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of b
Kazeer [188]

Answer:

Adjusted cash balance : $25850

Explanation:

The goal of a reconciliation statement is to ascertain the differences between the banks records and the depositor’s records and make accounting changes as deemed appropriate. There is a general flow that is used to make the correcting entries:

1. The process flow starts with the bank’s ending cash balance

2. Add any deposits made by the company to the bank that are in transit

3. Deduct any cheques that are uncleared by the bank

4. Add or deduct any other differences available as necessary

5. In the company bank records, once again start with the ending balance

6. Add interests earned

7. Deduct any bank service fees, penalties and NSF (Non-Sufficient Funds) cheques.

8. Add or deduct any other differences available as necessary

At the end of this process, it is likely that both accounts would be equal and tally.

Please refer attached table for details on the calculation.

6 0
3 years ago
At the end of Year 2, retained earnings for the Baker Company was $3,350. Revenue earned by the company in Year 2 was $3,600, ex
garik1379 [7]

Answer:

Retained earnings at the beginning of Year 2 is $2,950.

Explanation:

Given the following:

Retained earnings at the end of Year 2 = $3,350

Revenue earned by the company in Year 2 = $3,600

Expenses paid during the period = $1,900

Dividends paid during the period = $1,300

Retained earning for year 2 = Revenue earned by the company in Year 2 - Expenses paid during the period - Dividends paid during the period = $3,600 - $1,900 - $1,300 = $400

Retained earnings at the beginning of Year 2 can be using the following formula:

Retained earnings at the end of Year 2 = Retained earnings at the beginning of Year 2 + Retained earning for year 2 .......... (1)

Substituting the values into equation (1) and sole for Retained earnings at the beginning of Year 2, we have:

$3,350 = Retained earnings at the beginning of Year 2 + $400

Retained earnings at the beginning of Year 2 = $3,350 - $400 = $2,950

Therefore, retained earnings at the beginning of Year 2 is $2,950.

5 0
3 years ago
Exercise 19-08 a-b Oriole Corporation incurred the following costs while manufacturing its product.
telo118 [61]

Answer:

$371,700

Explanation:

The computation of the cost of goods sold is shown below:

Cost of goods manufactured  = Direct materials used + Direct labor cost + Manufacturing overhead cost + beginning work in process inventory - ending work in process inventory

where,

Manufacturing overhead cost is

= Depreciation on plant + Factory supplies used + Property tax on plant

= $61,000 + $29,300 + $21,800

= $112,100

The cost of goods manufactured is

= $126,400 + $113,500 + $112,100 + $14,600 - $16,700

= $349,900

Now the cost of goods sold is

= Beginning finished goods + Cost of goods manufactured - ending finished goods

= $70,900 + $349,900 - $49,100

= $371,700

6 0
3 years ago
Suppose the following transactions occur during the current year:
Genrish500 [490]

Answer:These transactions combines will increase the Gross Domestic Products by +2500

Explanation:

Gross domestic product is the Value of all goods and service produced within the boarders of the country over a period of time. Gross domestic product is measured in monetary terms. Gross domestic product can also be calculated as a total of all expenditures on goods and services in the economy.

we will now sow how these Transactions affect the gross domestic product

1. 50 cases of beer from a dutch distributor at $40 per case

When Dmitri (assuming he is in the United States) Purchases a 50 cases of beer abroad, Imports increase by $2000 ($40 x 50 cases)

Imports have a negative impact on the Gross domestic product, Therefore the Gross domestic product will decrease by $2000

-$2000 imports = -2000 Gross Domestic Product. ceteris pa

2.US Company sells 200 Transistors to a Spanish company at $15 per case

Exports increase Gross domestic product. When a US Company sells 200 transistors to a Spanish Company at a price of $15 per transistor, Exports will increase by $3000. When export increase Gross domestic product will also increase by -$3000 ceteris par

+$3000 export = + 3000 Gross Domestic Product.

3. Jake US Citizen pays $1500 for a laptop he orders from microell (a US company)

This transaction will increase Consumer's domestic consumption which is represent by a Variable denoted by C in the Consumption equation. When Jake pays $1500, Consumption increases by $1500 which also increases Gross domestic Product by $1500 ceteris pa

+$1500 Consumption = + $1500 Gross domestic product

Combined effect of these Transactions

Consumption + Investment + government spending + (export - import)= GDP

+$1500 + 0 + 0 + 0 + ($3000 - $2000) = + $2500        

These transactions combines will increase the Gross Domestic Products by +2500

8 0
3 years ago
Read 2 more answers
A process in which different individuals and units perform different tasks is known as:
elena-s [515]
The process is a multiplicative inverse of which people seem to check
4 0
3 years ago
Other questions:
  • Metlock Company took a physical inventory on December 31 and determined that goods costing $185,000 were on hand. Not included i
    15·1 answer
  • Journalize the entries to record the following selected transactions.
    15·2 answers
  • Innovations such as the microchip and the Internet lead to business cycle variations because
    13·1 answer
  • Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or
    7·1 answer
  • BJ Company's net working capital and all of its expenses vary directly with sales. The firm is currently operating at 86 percent
    12·1 answer
  • Amazon has decided to enter the college bookstore market. The goal of "Amazon Campus" is to offer co-branded university-specific
    5·1 answer
  • Tetra Co. uses the perpetual inventory system and a FIFO cost flow method. On January 1, the company purchased 2,000 units of in
    9·2 answers
  • Anton needs to identify the eight different scoring statistics for all the players on his school’s basketball team. Which graphi
    8·2 answers
  • $500 at 3.2% for 3 years <br> $450 at 3.1% for 4 years<br> $515 at 3% for 3 years?
    8·1 answer
  • the product life cycle (plc) defines the life of a product in four basic stages, which include .
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!