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Annette [7]
3 years ago
11

Torque Corporation is expected to pay a dividend of $1.00 in the upcoming year. Dividends are expected to grow at the rate of 6%

per year. The risk-free rate of return is 5% and the expected return on the market portfolio is 13%. The stock of Torque Corporation has a beta of 1.2. Torque's stock price is
Business
1 answer:
dezoksy [38]3 years ago
7 0

Answer:

The answer is "\$11.62 \ (approx)"

Explanation:

Using formula:

\text{Required return=risk free rate}+\text{beta}\times \text{(market rate-risk free rate)}

=5+(13-5) \times 1.2\\\\=14.6\%\\\\\text{Intrinsic value}=\frac{D_1}{\text{(Required return-Growth rate)}}\\\\= \frac{1}{(0.146-0.06)}\\\\= \frac{1}{(0.140)}\\\\=\$11.62\ (Approx)

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2 years ago
Duluth Ranch, Inc. purchased a machine on January 1, 2018. The cost of the machine was $21,500. Its estimated residual value was
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Answer:

Explanation:

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Residual value - $6,500

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Total units produced = 10000

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Double depreciation raate = 40%

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Straight line 20%*15000        3000                3000

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850/10000*15000                   1275

1300/10000*15000                                          1950

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2018 = 40%*21500 = 8600

2019 =(21500-8600) *40%= 5160

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