D is the correct answer according to AREA Alabama Electric Co-ops
Answer:
Price of stock = $49.5
Explanation:
<em>The Dividend Valuation Model(DVM) is a technique used to value the worth of an asset. According to this model, the value of an asset is the sum of the present values of the future cash flows would that arise from the asset discounted at the required rate of return. </em>
If dividend is expected to grow at a given rate , the value of a share is calculated using the formula below:
Price of stock=Do (1+g)/(k-g)
Do - dividend in the following year, K- requited rate of return , g- growth rate
DATA:
D0- 2.7
g- 10%
K- 16%
Price of stock = ( 2.7×1.1)/(0.16-0.1) = 49.5
Price of stock = $49.5
Option C
This is an example of diagonal communication.
<u>Explanation:</u>
Diagonal communication is the distribution of information between various structural levels inside a business. Diagonal communication is advantageous as it is active, practical and valuable. It can also develop greater coordination between staff members. It can assist in solving problems precisely as various approaches are taken concurrently.
It lessens the uncertainties of falsification or distortion by promoting communication among the appropriate parties. It also diminishes a manager's communication workload because he doesn't ought to work as an emissary among his direct statements and other administrators.
Answer:
The solution as per the given problem is provided below throughout the explanation portion below.
Explanation:
The given values are:
Debt issued,
= 120
Pretax earnings,
= 80
Tax,
= 35%
All equity firm,
= $320
Number of common stock,
= 50
(a)
Balance sheet before the debt issue's announcement will be:
<u>Assets </u><u> 320</u>
<u>Debt </u><u> 0</u>
<u>Equity </u><u> 320</u>
then,
The total will be "320".
(b)
The per share price will be:
= 
= 
= 
or,
After tax, the net income will be:
= 
= 
= 
= 
(c)
The return on equity will be:
= 
= 
= 
or,
= 
(%)
