Answer:
$19.80
Explanation:
The Diluted EPS of Dulce Corporation shall be determined through the following mentioned formula:
Diluted EPS=Net income/Number of outstanding shares
Net income= $4 million
Number of outstanding shares=Common stock shares+shares issued for free due to share options
Common stock shares=200,000
shares issued for free due to share options=Number of options*Intrinsic value/market price of common shares
Number of options=10,000
Intrinsic value=market price-exercise price=$25-$20=$5
Shares exercised due to share options=10,000*5/25=2,000
Diluted EPS=$4,000,000/200,000+2,000
=$19.80
Answer:
Q1) a. 6.60%
Q2) c. retaining a higher percentage of earning will result in a higher growth rate.
Explanation:
Q1.)
Use dividend discount model (DDM) to solve for the growth rate;
g = r- (D1/P0)
whereby;
g = dividend growth rate
r = required rate of return = 11.40% or 0.1140 as a decimal
D1 = next year's dividend = $1.14
P0 = Current stock price = $23.75
g = 0.1140 - (1.14/23.75)
g = 0.1140 - 0.048
g = 0.066 or 6.6%
Therefore, the growth rate is 6.60%, making choice A correct.
Q2.)
c. Retained earning is the proportion of total net profit that a company reinvests back into the business for the purpose of investing in other potentially profitable projects.The returns from these projects would increase the value of the company at a faster rate if a higher percentage e.g 90% is retained. On the other hand, if the company pays a larger portion of its retained earnings e.g 70% as dividends, it will experience a slower growth rate making choice C correct.
Answer:
13,085 units
Explanation:
The computation of the units needed to sell is shown below:
But before that first we have to compute the current operating income which is shown below:
Current operating income = Sales - variable cost - Fixed cost
= ($275 - $210) × 10,500 units - $640,000
= $42,500
Now
Increased fixed cost is
= $640,000 + $11,000
= $651,000
And,
Increased variable cost per unit is
= $210 + $12
= $222
Now
Sales needed to maintain Current operating income is
= (Fixed cost + Current operating income) ÷ (Sales price per unit - Variable cost per unit)
= ($651,000 + $42,500) ÷ ($275 - $222)
= 13,085 units
Answer:
The answer is:
A. Find the detailed calculation in the explanation section.
B. $6.33
C. $145.59/share
Explanation:
A.
Current dividend paid is $1.21
Growth rate for the next 5 years is 16 percent.
Dividend per share in Year 1 = $1.40 per share [$1.21 x 1.16]
Dividend per share in Year 2 = $1. 62 per share [$1.40 x 1.16]
Dividend per share in Year 3 = $1.88 per share [$1.62 x 1.16]
Dividend per share in Year 4 = $2.18 per share [$1.88 x 1.16]
Dividend per share in Year 5 = $2.53 per share [$2.18 x 1.16]
B.
Earnings per share (EPS) in Year 5 = Dividend per share in year 5 / Pay-out Ratio
$2.53/0.4
=$6.33
C.
Target stock price in five years = EPS in Year 5 x Benchmark P/E Ratio
= $6.33 per share x 23times
= $145.59/share
Answer:
the contractor should build 210 Carolina type homes and 60 Savannah type homes
Explanation:
you have to maximize the following equation: 80000C + 90000S
Where:
C = Carolina type homes
S = Savannah type homes
the constraints are:
160000C + 240000S ≤ 48000000
160C + 160S ≤ 43,200
C ≥ 0
S ≥ 0
using solver, the optimal solution is 210C + 60S = $22,200,000
