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a_sh-v [17]
3 years ago
8

Suppose you know that a company’s stock currently sells for $66.90 per share and the required return on the stock is 9 percent.

You also know that the total return on the stock is evenly divided between capital gains yield and dividend yield.
Required:1. If it’s the company’s policy to always maintain a constant growth rate in its dividends, what is the current dividend per share? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Business
1 answer:
klemol [59]3 years ago
3 0

Answer:

$2.88 per share                  

Explanation:

The computation of the current dividend per share is shown below:

As we know that

Cost of equity = Next year dividend ÷ current stock price + growth rate

Since the cost of equity is 9%

So growth rate = 4.5%

And, the Next year dividend ÷ current stock price = 4.5%

Therefore,  the next year dividend is

= $66.90 × 4.5%

= $3.0105

And, the current year dividend is

Next year dividend = Current year dividend × (1 + growth rate)

$3.0105 = Current year dividend × (1 + 4.5%)

So, the current year dividend is $2.88 per share

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7 0
1 year ago
Blanchard Company manufactures a single product that sells for $ 180 per unit and whose total variable costs are $ 126 per unit
Nuetrik [128]

Answer:

Part 1

<u>Income Statement at 15,600 units</u>

Sales ($ 180 x 15,600)                                     $2,808,000

Less Variable Costs ($126 x 15,600)             ($1,965,600)

Contribution                                                        $842,400

Less Fixed Costs                                               ($842,400)

Net Income                                                                    $0

Part 2

$3,278,000

Explanation:

Break even (units) = Fixed Cost ÷ Contribution per unit

                               = $ 842,400 ÷ ($ 180 - $126)

                               = 15,600 units

<u>Assume the company's fixed costs increase by $ 141.000</u>

Break even (units) = Fixed Cost ÷ Contribution per unit

                               = ($ 842,400 + $ 141.000) ÷ ($ 180 - $126)

                               = 18,212 units

Break even Revenue = 18,212 x  $ 180 =  $3,278,000

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Answer:

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