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Roman55 [17]
3 years ago
10

Cooperton Mining just announced it will cut its dividend from $4 to $2.50 per share and use the extra funds to expand. Prior to

the announcement, Cooperton’s dividends were expected to grow at a 3% rate, and its share price was $50. With the planned expansion, Cooperton’s dividends are expected to grow at a 5% rate. What share price would you expect after the announcement? (Assume that the new expansion does not change Cooperton’s risk.) Is the expansion a good investment?
Business
1 answer:
mylen [45]3 years ago
3 0

Answer: Share price after announcement is $41.67.

The Expansion is not a good investment.

Explanation:

To solve this we would need to first calculate the cost of equity. Given the Initial stock price as well as the dividend and growth rate, we are able to calculate the cost of equity using the Gordon Growth Formula which is,

Sp = D1/ (r - g)

Where,

Sp is stock price

D1 is the next dividend

r is cost of equity

g is growth rate.

Inserting the figures we have,

50 = 4 / ( r - 3%)

50 ( r - 3%) = 4

r = 4/50 + 3%

r = 11%

Given that we now know r, we can calculate the new stock price using the same formula,

Sp = D1/ ( r - g)

Sp = 2.5 ( 11% - 5%)

Sp = $41.67

The stock price after the announcement became $41.67.

The Expansion is NOT a good investment as it leads to a reduction in Stock Price.

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Easy money policy is _____.
Hoochie [10]

Answer:

Easy money policy is <em>monetary policy that increases money supply.</em>

Explanation:

This is usually done through reducing the interest rates by the central bank.

Easy money policy is implemented by the central bank of a country when it wants to increase money flow into the banks.

This policy when implemented leads to an increase in economic growth.

After a short time of implementation, there is experienced an increase in the value of securities.

3 0
3 years ago
The following information is for Punta Company for July: Factory overhead costs were applied to jobs at the predetermined rate o
Aleksandr-060686 [28]

Answer:

Solution 1 : Total Manufacturing Cost of Job S is $434,847.5 while for Job T is $ 392,247.5

Solution 2 : The amount of overheads has been over-applied and the Cost of Goods Sold will decrease by $94,695

Explanation:

<u>Solution 1</u>

Particulars                                             Job S ($)                Job T ($)

Direct material                                47,700               113,450

Direct labor                                        64,500                54,000

Overhead Applied (Hours* $51.50)      322,647.5       224,797.5

Total manufacturing cost                 434,847.5       392,247.5

<u>Solution 2</u>

In order to calculate the amount of over-applied or under-applied, we will take the difference between the overheads applied and the actual overheads incurred during the period. If the applied overheads are more than the actual then the amount has been over-applied and the Cost of Goods Sold will decrease. However, in case the overheads were under-applied then the Cost of Goods Sold would increase. The calculation has been done below:

Actual Overhead = $86,250 + $215,500 + $151,000 = $452,750

Applied overhead = 322,647.5 + 224,797.5 = $547,445

Over-applied/Under-applied overhead = Applied overhead - Actual Overhead

547,445 - 452,750 = $94,695. The overheads has been over-applied.  

Cost of Goods Sold account will be decreased by $94,695.

4 0
3 years ago
The following is the stockholders' equity section of Harbor Co.'s balance sheet on December 31:Common stock $10 par, 100,000 sha
AnnyKZ [126]

Answer:

Book value per share: 48.88

Explanation:

The book value per share is the minimun value of the company equity.

Book value per share = (Total Equity - Preferd Equity) / Total shares outstanding

Book value per share = 2,200,000 / 45,000  

Book value per share = 48.88

In the numerator, we do not deduct anything from equity because there are no preferred shares. In the dividend, the outstanding shares are 45,000, because 50,000 have been issued and 5,000 are held in treasury, despite being authorized to issue 100,000 shares.

6 0
3 years ago
What role, if any, should the U.S. government take in this issue of setting fair wages in developing countries?
Anuta_ua [19.1K]

Answer:

Corporations of the United States should be tracked by the U.S government to ensure that workers' rights in developing countries should not be compromised.

Explanation:

In many developing countries political leaders are afraid that if wage rates are enforced on big corporations they could be forced off global markets. Foreign investment capital is significant to the economy of developing countries and there is always fear that the loss of such investment may break the economies of these countries. The government of the U.S should ensure vigorous monitoring programs that require businesses to report the location of international factories publicly so that human rights organizations can track their actions independently.

3 0
3 years ago
Larson Company on July 15 sells merchandise on account to Stuart Co. for $1,000, terms 2/10, n/30. On July 20 Stuart Co. returns
pickupchik [31]

Answer:

b. $588

Explanation:

Terms 2/10, n/30 means that 2% discount for the payment within 10 days and the full amount to be paid within 30 days.

When Larson Company sold merchandise, the following entry was made to recording revenue (sales) and the receivable:

Debit Receivable Account $1,000

Credit Revenue $1,000

On July 20 Stuart Co. returns merchandise, the entry is made to record the decreasing of Receivable Account:

Debit Revenue $400

Credit Receivable Account $400

The balance Receivable Account of Stuart Co. = $1000-$400 = $600

On July 24, Stuart Co. makes the payment, the sales discount was:

$600 x 2% = $12

The amount of cash received = $600-$12=$588

The following entry is made:

Debit Cash: $588

Debit Sales discount: $12

Credit Receivable Account $600

7 0
3 years ago
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