The following information relates to last year's operations at the Legumes Division of Gervani Corporation:

1. Jupiter Explorers has $9,000 in sales. The profit margin is 5 percent. There are 6,300 shares of stock outstanding, with a pr

zubka84 [21]

Answer:

25.21

Explanation:

The Price Earnings Ratio explains the correlation between a company’s stock price and earnings per share (EPS).

Calculating the price earning ratio is by the formula below.

PE = share price/ earning per share.

For Jupiter, the share price is $1.80 per

The EPS is as net income/outstanding shares

net income is the profits = 5 % of 9,000

net income = 5/100 x $9000

=0.05 x $9000

=$450

EPS =450/6300

EPS= 0.071

The Price Earnings Ratio= $1.80/0.0714

=25.21

3 0

3 years ago

"Alfonzo and Wendy were arguing about whether their company should issue par value common stock or no-par value common stock. Al

Darina [25.2K]

Answer:

Wendy was right because par value stock has not impact on the market price of the stock.

Explanation:

Par Value:

The par value of stock is the value, that is generally a very small amount, which is stated on the stock certificates of a company. It has no connection with the market price of the stock.

Some states ask the company to assign a par value for stock so that's why the companies minimum par value to the stock.
If some companies don't assign par value to their stock then its means that their shares have no-par value.
In our case, Wendy was right due to the fact that par values has no concern with the market price of the stock.

8 0

3 years ago

Megatrends stock will generate earnings of $2 per share this year. The discount rate for the stock is 10%, and the rate of retur

lawyer [7]

Answer:

a. Find both the growth rate of dividends and the price of the stock if the company reinvests the following fraction of its earnings in the firm:

(i) 0% ⇒ g = 0, P₀ = $2/10% = $20

(ii) 20% ⇒ g = 0.2 x 10% = 2%, P₀ = $1.632/8% = $20.40

(iii) 40% ⇒ g = 0.4 x 10% = 4%, P₀ = $1.248/6% = $20.80

b. Redo part (a) now assuming that the rate of return on reinvested earnings is 15%.

(i) 0% ⇒ g = 0, P₀ = $2/10% = $20

(ii) 20% ⇒ g = 0.2 x 15% = 3%, P₀ = $1.648/7% = $23.54

(iii) 40% ⇒ g = 0.4 x 15% = 6%, P₀ = $1.272/4% = $31.80

What is the present value of growth opportunities (PVGO) for each reinvestment rate

ROE = 10%, reinvestment rates:

(i) 0%: PVGO = $20 - $2/10% = $0

(ii) 20%: PVGO = $20.40 - $2/10% = $0.40

(iii) 40%: PVGO = $20.80 - $2/10% = $0.80

ROE = 15%, reinvestment rates:

(i) 0%: PVGO = $20 - $2/10% = $0

(ii) 20%: PVGO = $23.54 - $2/10% = $3.54

(iii) 40%: PVGO = $31.80 - $2/10% = $11.80

Explanation:

sustainable growth rate = g = retention rate x ROE

PVGO = stock price - earnings/Re

5 0

3 years ago

Planning teams are most effective when:

Free_Kalibri [48]

Planning teams are most effective when (C) the group finds common ground on which to build consensus for action. In a team there are different people with different points of view. To bring these people together in an attempt to find what they all like or have in common will help to focus the group's purpose on their goal for planning.

6 0

3 years ago

The trial balance of a company included the following account balances: Cash, $25,000; Short-Term Investments, $10,000; Accounts

Rainbow [258]

Answer:

C. $75,000

Explanation:

All the current assets which can be quickly converted into cash are the quick assets. Inventory and Prepaid Insurance are not the p[art of this because these take much longer time to convert into cash than other current assets. Receivable has more liquidity than inventory because it takes less time to recover.

Cash $25,000

Short-Term Investments $10,000

Accounts Receivable $40,000

Total Quick Assets $75,000

5 0

3 years ago

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