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dybincka [34]
3 years ago
7

Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 25 percent for the next three years, with the gro

wth rate falling off to a constant 4.5 percent thereafter. If the required return is 10.5 percent and the company just paid a dividend of $2.85, what is the current share price?
Business
1 answer:
mel-nik [20]3 years ago
3 0

Answer:

The current share price is $82.85

Explanation:

D1 = (2.85*1.25)

    = 3.56

D2 = (3.56*1.25)

     = 4.45

D3 = (4.45*1.25)

     = 5.566

Value after year 3 = (D3*Growth rate)/(Required rate - Growth rate)

                              = (5.566*1.045)/(0.105 - 0.045)

                               = $96.95  

current price = Future dividend and value*Present value of discounting factor  

= 3.56/1.105 + 4.45/1.105^2 +5.566/1.105^3 + $96.95/1.105^3

= $82.85

Therefore, The current share price is $82.85

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LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.5 hours of direct labor at the r
swat32

Answer:

The correct option is D

Labour budget = $1,974,175

Explanation:

The labour budget is the product of the standard labour cost per unit and the budgeted production in units

Labour budget = standard labour cost× production budget in unit

The production budget can bed determined by adjusting the sales budget for closing and opening inventories.  

Production budget = Sales budget +closing inventory - opening inventory

Production budget = 39,000 + 100 -200 = 38,900 units

Labour budget = $14.50× 3.5× 38,900 = $1,974,175

Labour budget = $1,974,175

6 0
3 years ago
What is the effect of a 10 percent price increase on quantity demanded if elasticity is infinite?
Julli [10]

Answer:

Demand drops to zero

Explanation:

Infinite elasticity of demand is also called perfect elasticity of demand.

In this scenario the demand for a product is attached to it's price.

There is an infinite change in the quantity demanded as a result of change in price.

Graphically it is a horizontal demand curve as represented in the attached

Even a small increase in price will cause demand to fall to zero.

Examples are luxury goods such as high end cars and expensive jewelry.

4 0
3 years ago
Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and unit contribution margin are as follows. Sal
Korvikt [17]

Answer:

Results are below.

Explanation:

<u>To calculate the break-even point in units, we need to use the following formula:</u>

Break-even point (units)= Total fixed costs / Weighted average contribution margin

Weighted average contribution margin= 0.2*33 + 0.5*22 + 0.3*41

Weighted average contribution margin= $29.9

Break-even point (units)= 4,544,800 / 29.9

Break-even point (units)= 152,000 units

<u>Now, for each product:</u>

<u></u>

Lawnmowers= 0.2*152,000=30,400

Weed-trimmers= 0.5*152,000= 76,000

Chainsaws= 0.3*152,000= 45,600

8 0
3 years ago
Which of the following is not an example of income? wages food tips allowance.
kondaur [170]

Food because income is money you take in.

4 0
3 years ago
Read 2 more answers
Bennett Co. has a potential new project that is expected to generate annual revenues of $262,100, with variable costs of $144,00
swat32

Answer:

Operating cash flow= $29,886

Explanation:

Giving the following information:

Sales= $262,100

Total variable cost= $144,000

Total fixed costs= $61,300.

Annual interest expense of $24,500. The annual depreciation is $25,200 and the tax rate is 34 percent.

<u>We need to determine the operating cash flow:</u>

Sales= 262,100

Total variable cost= (144,000)

Contribution margin= 118,100

Total fixed costs= (61,300)

Depreciation= (25,200)

Interest= (24,500)

EBIT= 7,100

Tax= (7,100*0.34)= (2,414)

Depreciation= 25,200

Operating cash flow= 29,886

7 0
3 years ago
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