Hung jury is the answer
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Answer:
The value of the stock = $19.64
Explanation:
According to the dividend valuation model, <em>the value of a stock is the present value of the expected future cash flows from the stock discounted at the the required rate of return.</em>
Year Workings Present value(PV)
1 $1 × (1.22) × 1.11^(-1) = 1.10
2 $1 × (1.22)^2 ×(1.11)^(-2) = 1.21
3 $1 × ((1.22)^2 × (1.05))/0.11-0.05) = 21.35 ( PV in year 2 terms)
PV (in year 0) of Year 3 dividend = 21.35 × 1.11^(-2)
= 17.33 (see notes)
<em>The value of the stock</em> = $1.10+ $1.21 + 17.3
= $19.64
Notes:
<em>Note the growth applied to year 3 dividend gives the PV in year 2 terms. So we need to re-discount again to year 0.</em>
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The value of the stock = $19.64
Answer:
E) I, II, and III.
Explanation:
Variable costing can be regarded as a concept of managerial accounting cost
whereby during the period of producing the product there is incurred
manufacturing overhead.
Absorption costing income statement, utilize absorption costing when creating income statement. The income statement focus on the cost through sectioning of cost into period cost and product.
It should be noted that
I. A variable-costing income statement discloses a firm's contribution margin.
II. Cost of goods sold on an absorption-costing income statement includes fixed costs.
III. The amount of variable selling and administrative cost is the same on absorption- and variable-costing income statements.
