"Expected Return Ecolap Inc. (ECL) recently paid a $0.46 dividend. The dividend is expected to grow at a 14.5 percent rate. At a
1 answer:
Answer:
- <u>15.7%</u>
Explanation:
The <em>price</em> of a <em>stock</em> can be modeled by the present value of the stream of future <em>dividends</em> discounted at a rate equal to the<em> return expected</em>.
The equation, when the dividends are expected to <em>grow</em> at a constant rate, less than the return rate is:
Where:
- Price₀ is the <em>current price</em>: $44.12
- Div₁ is the <em>dividend </em>to be paid a year from now: $0.46 × 1.145 = $0.53
- g is the expected constant <em>growth rate</em>: 14.5% = 0.145
- r is the <em>expected return</em>
Then, you can solve for r:
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Answer:
<h2> Whispering Winds Corp.</h2>Statement of Cash Flows (Indirect Method) 2017
Cash flow from operating activities:
net income $161,100
Adjustments to reconcile net income:
+ depreciation expense $40,160
+ loss on sale of equipment $2,020
Change in current assets:
- increase in accounts receivable ($40,050)
- increase in inventory ($44,310)
+ increase in prepaid expenses $1,980
Change in current liabilities:
+ increase in accounts payable $2,580
- decrease in accrued exp. payable ($10,070)
Net cash provided by operating activities $113,410
Cash flow from investing activities:
purchase of new equipment ($164,450)
sale of old equipment $33,650
Net cash provided by investing activities ($130,800)
Cash flow from financing activities:
Proceeds from issue of new stocks $171,150
- redemption of bonds ($49,180)
- dividends paid ($85,680)
Net cash provided by financing activities $36,290
<u>Net increase in cash $18,900</u>
