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Lerok [7]
3 years ago
13

Uncle John's Pipe Company has been experiencing several years of financial difficulty and, thus, has considered maintaining its

dividend payment at $2.50 indefinitely. What is the value of its common stock if the required rate of return is 8.5 percent?
Business
2 answers:
Iteru [2.4K]3 years ago
6 0

Answer:

The value of its common stock is $29.41

Explanation:

As the Dividend payment is for indefinite period of time, This is the perpetuity payment. The value of share can be determined  by calculating the present value of perpetuity payment.

The formula for the present value of perpetuity is as follow

Present value of perpetuity = Cash flow / Required Rate of return

In this case the present value of perpetuity is the value of stock cash flows is The dividend payment.

Value of Stock = Dividend / Required Rate of return

Value of Stock = $2.5 / 8.5%

Value of Stock  = $29.41

Mars2501 [29]3 years ago
6 0

Answer: Value of the common stock = $29.41

Explanation:

GIVEN the following ;

Dividend =$2.50

Rate of return (r) = 8.5% 0.085

The question above requires us to calculate the value of common stock which is equivalent to the present value of perpetuity which is the amount of a fixed income or cash flow an individual earns at regular interval for an INDEFINITE period.

RECALL;

PRESENT VALUE of PERPETUITY IS GIVEN BY:

PV of perpetuity = (Dividend or coupon per period ÷ interest rate(r))

PV of perpetuity = ($2.50 ÷ 0.085)

PV of perpetuity = $29.411

PV of perpetuity = $29.41

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nadezda [96]

Answer:

The correct answer is All of the options are true.

Explanation:

Proforma financial statements are projected statements. Generally, the data is forecast one year in advance, for example, in a transformation company the proforma status obtained based on the master budget is very complete, all projections are seen starting with the sales forecast and from this They make the other projections.

The Proforma Financial Statements are states that contain, in whole or in part, one or more assumptions or hypotheses in order to show what the financial situation or the results of the operations would be if they occurred.

5 0
3 years ago
________ is a competitive strategy for creating brand loyalty by developing new and unique products and services that are not ea
boyakko [2]

Answer: PRODUCT DIFFERENTIATION

Explanation:

This is a marketing strategy that some companies employ whereby they aim to distinguish their products from that of competitors by giving it certain features that expound on its strength in the market.

This strategy can create a competitive advantage for goods that will ensure that the company maintains a dominant place in the market.

7 0
3 years ago
Cyclical unemployment is BEST described as unemployment arising from
Ira Lisetskai [31]

Answer:

Contraction cycle or Recession

Explanation:

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3 0
3 years ago
Units of Labor Quantity of Output Marginal Revenue
lora16 [44]

Answer:

$7,650

Explanation:

Calculation for the marginal revenue product of the fifth unit of labor

Using this formula

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Let plug in the formula

Fifth unit of Labor marginal revenue product=1,530 *$5

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3 years ago
What would be the consequences if conflict amongst staff in this workplace is not resolved?
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Answer:

Check screenshot attached below

Explanation:

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