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
Nat2105 [25]
3 years ago
7

Which of the following statements is​ FALSE? A. According to the constant dividend growth​ model, the value of the firm depends

on the current dividend​ level, divided by the equity cost of capital plus the grow rate. B. A firm can only pay out its earnings to investors or reinvest their earnings. C. Successful young firms often have high initial earnings growth rates. D. Estimating​ dividends, especially for the distant​ future, is difficult.
Business
1 answer:
Vedmedyk [2.9K]3 years ago
4 0

<u>A. According to the constant dividend growth​ model, the value of the firm depends on the current dividend​ level, divided by the equity cost of capital plus the grow rate.</u>

This is the false statement.

<u>Explanation</u>:

The fair value of stock can be calculated using the dividend growth model. While calculating the value of the stock, the growth of the dividends should be considered either in a stable rate or at a different rate during the period at hand.

The dividend growth model is also known as a <u>valuation model</u> as it is used to achieve the value of the stock.

Equity cost is the cost that the firm owes to the equity investors to compensate the risk of their investment.

You might be interested in
For each of the following scenarios, classify the type of spending (C,I,G,Xn), describe its impact on gross domestic product (in
alexandr402 [8]

Answer:

A. A new airplane purchased by United Parcel Service.

  • Investment (in fixed assets), GDP grows

B. The tuition you pay during your first year of college.

  • Consumption (of services), GDP grows

C. The social security check your grandmother receives.

  • Not included in GDP, social security checks are considered transfer payments.

D. A new purchase of 50,000 shares of Time/Warner stock.

  • Not included in GDP, only IPOs are included in GDP

E. A new pair of tennis shoes made in China and purchased by an American shoe store.

  • Import, GDP decreases since net exports decrease

Explanation:

8 0
3 years ago
The following selected information was extracted from the 20x1 accounting records of Lone Oak Products:
joja [24]

Answer:

1. $513,000

2. $913,200

3. $926,400

4. $154,420

5.11340 Units

Explanation:

1. Calculation for Lone Oak’s manufacturing overhead for the year.

Manufacturing overhead

Indirect labor 109,000

Building depreciation (80000*75%) 60,000

Other factory cost 344,000

Manufacturing overhead $513,000

2. Calculation for Lone Oak’s cost of goods manufactured.

First step is to calculate the Direct material used

Direct material used = 15,800+175000-18200

Direct material used= 172,600

Second step is to calculate the Total manufacturing cost

Total manufacturing cost = 172,600+254,000+513,000

Total manufacturing cost= 939,600

Now let calculate the Cost of goods manufactured

Cost of goods manufactured = 35,700+939,600-62100

Cost of goods manufactured = $913,200

3. Compution for the company’s cost of goods sold.

Cost of goods sold = 111100+913,200-97900

Cost of goods sold = $926,400

4. Calculation to Determine net income for 20x1, assuming a 30% income tax rate.

Net income :

Sales 1495000

Cost of goods sold -926,400

Gross profit 568,609

Selling and administrative expense (133000+20000+195000) 348000

Profit 220,600

Tax 30% 66,180

Net income $154,420

(220,600-66,180)

(25%*80,000=20,000)

5. Calculation to Determine the number of completed units manufactured during theyear.

No of unit completed = 1190+(1,495,000/$130 per unit)-1350

No of unit completed =1190+11500-1350

No of unit completed = 11340 Units

7 0
3 years ago
Choose the best answer:
Juli2301 [7.4K]

Answer:

Option B is correct.

Explanation:

Option A is incorrect because the expected return must be greater than the marginal cost of the capital which means that the Net Present Value must be positive.

Option B is correct because the increase in cost of debt or capital would increase the weighted average cost of capital. This is because weighted average cost of capital is directly proportional to cost of capital sources.

Option C is incorrect because its not the cost of one of the capital sources, actually it is the weighted average cost of capital which when starts increasing at a point due to increase in the level of financing is known as breaking point.

So the only statement that is correct is option B.

Kindly don't forget to rate the answer. Thanks

3 0
3 years ago
Last year, Myron purchased a $10,000 certificate of deposit with a 3% rate of interest from his bank. The government reported th
Dmitrij [34]

Answer:

Myron gains, while the bank loses.

Explanation:

Fallen in prices is usually cause by deflation i.e a general decrease in the prices of goods and services which enhances the purchasing power of money.

In this case, 5% fall in price will increase the value of the Myron investment with bank and caused bank more money .

8 0
3 years ago
Although the discount stores in Goreville central shopping district are expected to close within five years as a result of compe
rosijanka [135]

Answer: <em>Option (B) is correct.</em>

Explanation:

If true, the following will most seriously weakens the argument: There has been an increasing rate in store opening in the central shopping district (CSD) since Colson's have opened discount stores.

Since after Colson's opened, the locations which were vacant became stores in particular discount store which did not spar with Colson's. Now that we have a discount store & department store without discount. Therefore when these stores close while competing with SpendLess, they wont be replaced with regular non-discount stores .

8 0
3 years ago
Other questions:
  • You and a coworker have been trying to develop a linear equation that describes the local household consumption function. Your c
    11·1 answer
  • The unit of measure assumption states that:
    14·1 answer
  • When Beta Company bought Gamma Company, Beta sold off about 30% of Gamma’s assets because they did not need them. Beta kept only
    13·1 answer
  • "Google employs the practice of team building and rewards ideas that are outside the box. They are likely to have ________ compa
    8·1 answer
  • A client with renal colic is scheduled for extracorporeal shock-wave lithotripsy. The night before the procedure, the client put
    9·1 answer
  • William is a single writer (age 35) who recently decided that he needs to save more for retirement. his 2017 agi is $65,000 (all
    15·1 answer
  • On November 1, 2021, Horton Company purchased Lopez, Inc., 10-year, 9%, bonds with a face value of $800,000, for $720,000. An ad
    6·1 answer
  • Selected current year company information follows: Net income $ 16,753 Net sales 720,855 Total liabilities, beginning-year 91,93
    8·1 answer
  • How creamy is creamy
    5·2 answers
  • Which level of strategic management focuses on the organization as a whole?
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!