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Blababa [14]
4 years ago
12

Majestic Homes' stock traditionally provides an 8% rate of return. The company just paid a $2 a year dividend which is expected

to increase by 5% per year. If you are planning on buying 1,000 shares of this stock next year, how much should you expect to pay per share if the market rate of return for this type of security is 9% at the time of your purchase?
Business
2 answers:
NemiM [27]4 years ago
3 0

Answer:

The intrinsic value per year would be $52.5

Explanation:

We use the gordon model for stock valuation:

\frac{divends}{return-growth} = Intrinsic \: Value

current year dividends dividends x (1 + rgowth) = next year dividends

$2 * ( 1 + 0.05 ) = 2.10

then:

rate = 0.09

growth = 0.05

2.10/(0.09-0.05) = 52.5

MakcuM [25]4 years ago
3 0

Answer:

$52.5

Explanation:

Majestic Homes' stock traditionally provides an 8% rate of return. The company just paid a $2 a year dividend which is expected to increase by 5% per year. If you are planning on buying 1,000 shares of this stock next year, you should you expect to pay $52.5 per share if the market rate of return for this type of security is 9% at the time of your purchase.

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Carey Company buys land for $50,000 on 12/31/14. As of 3/31/15, the land has appreciated in value to $50,700. On 12/31/15, the l
sweet-ann [11.9K]

Answer:

$0

Explanation:

There is no reason why Carey Company should increase their land account in 2015. As long as the company owns the land they should not modify the land account, since land doesn't depreciate. Even if they build something new on the land site, that will increase the land improvements account or buildings account, not the land account.

If they decide to sell the land then the original purchase value will serve as the basis for calculating capital gains taxes.

3 0
3 years ago
According to the output effect of a factor price increase, the demand for
Allisa [31]

Answer:

A) the factor whose price has increased will decrease, but the demand for the other factors

Explanation:

The production of goods and services in an economy comes from the combination of factors of production, for example labor and machinery. When the price of one of the factors of production increases, the quantity demanded by that factor will decrease, since there will be a rearrangement in production to alter the necessary composition between the factors in the production of a good. In other words, one factor will be replaced by another as much as possible.

For example, if the shoe production uses 2 machines and 10 workers. If the price of labor increases, the company may invest in buying one more machine and reducing the number of workers to 5.

6 0
3 years ago
Consider a corrupt provincial government in which each housing inspector examines two newly built structures each week. All the
patriot [66]

Answer:

$104,000

Explanation:

The computation is  shown below:

= Bribe cost per each housing inspector × number of weeks in a year × number of newly built structures each week

= $1,000 × 52 weeks × 2

= $104,000

We simply multiply the three components i.e Bribe cost per each housing inspector, number of weeks in a year, and the number of newly built structures each week so that the accurate value can come.

4 0
4 years ago
Suppose Presented below is 2022 information for for PepsiCo, Inc. and The Coca-Cola Company. ($ in millions) PepsiCo Coca-Cola N
pashok25 [27]

Answer:

$1,370 and $2,199

Explanation:

The formula and computation of the free cash flow is shown below:

= Net cash provided by operating activities - Capital expenditures - Dividend paid

For Pepsi Co, it would be

= $6,149 - $1,938 - $2,841

= $1,370

For coca-cola, it would be

= $7,857 - $1,924 - $3,734

= $2,199

As we see that, the coca-cola company has higher free cash flow than the Pepsi co

6 0
4 years ago
If there was a 24% chance of having a contract signed to purchase a home in any one month and there were 55 homes on the market,
KonstantinChe [14]

Answer:

a. 10.3%

Explanation:

P∝F of Binomial distribution is given as Pr.(x=x) = nCxP^x(1-p)^(n-x)

P = 0.24, n= 55, x =15 Note: C = Combination

Pr.(x = 15) = 55"C"15(0.24)^15(0.76)(55-15)

Pr.(x = 15) = 55"C"15(0.24)^15(0.76)^40

Pr.(x = 15) = 0.1026

Pr.(x = 15) = 10.26%

Pr.(x = 15) = 10.3%

3 0
3 years ago
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