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jeyben [28]
3 years ago
9

Kindzi Co. has preferred stock outstanding that is expected to pay an annual dividend of $4.74 every year in perpetuity. If the

required return is 4.59 percent, what is the current stock price
Business
1 answer:
olasank [31]3 years ago
3 0

Answer:

The price of the preferred stock today is $103.27

Explanation:

The preferred stock pays a constant dividend after equal intervals of time and has an indefinite maturity. Thus, a preferred stock is just like a perpetuity. The value or price of a perpetuity can be calculated using the following formula.

The price or a perpetuity:

P = Cash Flow / r

As the cash flow in this case is dividends so we will use dividends in place of cash flow and divide by the required rate of return.

P = 4.74 / 0.0459

P = $103.267 rounded off to $103.27

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Naily [24]

Answer:

The correct answer is option c.

Explanation:

A perfectly competitive market has a large number of buyers and sellers. The firms are price takers and the price is determined by the market forces. Thus the monopoly firms face a horizontal demand curve. This horizontal line represents price, average revenue, and marginal revenue. The equilibrium is obtained where price, (average revenue and marginal revenue) is equal to marginal cost. There is no restriction on entry and exit of firms in the long run. That's why firms face a break-even in the long run.  

While in a monopoly market there is a single firm. This firm fixes price higher than marginal cost. The demand curve of the monopoly is a downward sloping showing relatively elastic demand. A monopoly firm can earn profits in both the short run as well as the long run.

6 0
3 years ago
Olongapo Sports Corporation is the distributor in the Philippines of two premium golf balls-the Flight Dynamic and the Sure Shot
lesya [120]

Increase in contribution margin = P 183,750×45.9% = P84,341.25.

Gross margin and gross margin both consider the profitability of businesses of all sizes. The difference between them is that gross margin compares profits and sales in dollars, whereas gross margin compares costs and sales. To calculate profit margin, start with gross profit, which is the difference between sales and COGS. Then find the percentage of sales that equals the gross profit.

Margin is the down payment you make for the total cost of your home. Lenders will only finance up to 75-90% of the total cost of the property, leaving the rest as margin. Lenders see this upfront payment as a sign of commitment, and large payments reduce lending risk.

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6 0
1 year ago
A Six Sigma deployment can be deemed effective even if the number of defects are not reduced to 3.4 defects per million. True Fa
Damm [24]

Answer:

False.

Explanation:

Six Sigma is a quality control standard that was developed by Motorola Inc in 1986. It aims to reduce defects in goods produced.

While production cycle remains constantor faster, the quality of output should be kept below 3.4 defects per million.

Six Sigma is now applied in various fields like customer service to ensure customer retention, and management strategies.

So the statement above is false, defects must be kept below 3.4 per million to comply with Six Sigma standard.

7 0
3 years ago
Winterbourne is considering a takeover of Monkton Inc. Winterbourne has 18 million shares outstanding, which sell for $56 each.
Whitepunk [10]

Answer:

Price of per share to be paid by Winterbourne to Monkton shareholders  =$ 33 M

Explanation:

Before merger the netwoth  = No.of shares * Price

= 13M * $ 28

= $ 364 M

Price of per share to be paid by Winterbourne to Monkton shareholders  = [ Net worth of Monkton before Merger + Merger Gain ] / No.of Shares

= [ $ 364 M + $ 65 M ] / 13 M

= $ 33 M /

4 0
2 years ago
Why does a stock dividend require a formal journal entry in the financial accounting records when a stock split does not?
adelina 88 [10]
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4 0
3 years ago
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