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Natali5045456 [20]
3 years ago
11

You have decided that you would like to own some shares of GH Corp. but need an expected 12% rate of return to compensate for th

e perceived risk of such ownership. What is the maximum you are willing to spend per share to buy GH stock if the company pays a constant $3.50 annual dividend per share?
Business
1 answer:
oee [108]3 years ago
3 0

Answer:

Share price = 29.16

Explanation:

Given:

Dividend paid = $3.50

Required rate  of return = 12% = 12/100 = 0.12

Growth rate  = 0%

Find:

Share price  = ?

Computation:

⇒ Share price  = Dividend paid / [Required rate  of return - Growth rate ]

⇒ Share price = $3.5/(0.12-0)

⇒ Share price = 29.16

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5 0
2 years ago
Joyce works hard and puts in many extra hours. For this, she can anticipate a pay raise, a promotion, or an expanded sales terri
Alex17521 [72]

Answer:

Expectancy theory

Explanation:

Expectancy theory states that when an individual is faced with different choices they will be motivated in a certain way in choosing a particular option based on what they expect to be the result of the choice.

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In the given scenario Joyce works hard and puts in many extra hours, and getting a promotion is most important to Joyce.

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7 0
3 years ago
You observe the following term structure: Effective Annual YTM 1-year zero-coupon bond 5.2 % 2-year zero-coupon bond 5.3 3-year
Lisa [10]

Answer:

Explanation:

a. If you believe that the term structure next year will be the same as today’s, calculate the return on (i) the 1-year zero and (ii) the 4-year zero.

b. Which bond provides a greater expected 1-year return? O 1-year zero-coupon bond O 4-year zero-coupon bond

The return on one year bond is = 5.2%

The price of 4 year bond today

=\frac{ 1000}{ (1.055)^4}

Price of 4 year bond today = 807.22

If yield curves is unchanged, the bond will have 3-year maturity and price will be

=\frac{  1000}{(1.054)^3}

If yield curves is unchanged, the bond will have 3-year maturity and price will be = 854.04

Return

=\frac{ (854.04 - 807.22)}{807.22}

Return = 5.8%

The longer term bond has given the higher return in this case at it's YTM fell during the holding period(4 -year)

8 0
3 years ago
Arturo, a calendar year taxpayer, paid $20,300 in medical expenses and sustained a $24,360 casualty loss in 2020 (the loss occur
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3 0
3 years ago
EB13.
Harman [31]

Answer:

Journal entries to record the expenses incurred are given below.

Debit Factory Overhead Control Account      $ 1300

Credit Utilities bills account                              $  700

Credit Accumlated factory depreciation          $  400

Credit property tax payable                              $  200

Journal entries to record the allocation of overhead at the predetermined rate of $1.50 per machine hour are given below.

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Credit Factory overhead applied account          $ 525

(1.5 * 350 (machine hours))

5 0
3 years ago
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