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rjkz [21]
3 years ago
15

Floyd Industries stock has a beta of 1.25. The company just paid a dividend of $.40, and the dividends are expected to grow at 5

percent per year. The expected return on the market is 12 percent, and Treasury bills are yielding 5.0 percent. The most recent stock price for Floyd is $67. a. Calculate the cost of equity using the DDM method. (Round your answer to 2 decimal places. (e.g., 32.16)) DCF method % b. Calculate the cost of equity using the SML method.
Business
1 answer:
stiks02 [169]3 years ago
3 0

Answer:

5.62%

13.75%

Explanation:

According to the DDM method,

the value of a stock = [dividend x ( 1 + growth rate)] / [cost of equity - growth rate]

67 = 0.4(1.05) / r - 0.05

multiply both sides of the equation by r -0.05

67(r - 0.05) = 0.42

divide both sides of the equation by 67

r - 0.05 = 0.006269

r = 0.0563

= 5.63%

b. the cost of equity using the capm method =

risk free rate of return + beta x ( expected return - risk free return)

5% + 1.25 x (12 - 5) = 13.75%

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McGuire Company acquired 100 percent of the voting common shares of Able Corporation by issuing bonds with a par value and fair
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Answer: $650,000

Explanation:

Given that,

Fair and par value of issued bonds = $150,000

Prior acquisition, McGuire reported

Total assets = $500,000

Liabilities = $280,000

Stockholders’ equity = $220,000

At that date, Able reported

Total assets = $400,000

Liabilities = $250,000

Stockholders’ equity = $150,000

Account payable to McGuire = $20,000

Total assets reported by McGuire after acquisition:

= Total assets + Fair value of investment

= $500,000 + $150,000

= $650,000

4 0
3 years ago
Adolescent group members may share information too soon or even reveal inappropriate information about themselves, for which of
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Answer:

Question: Adolescent group members may share information too soon or even reveal inappropriate information about themselves, for which of the following purposes?

Answer: To impress other members

Explanation:

There are various reasons why it can be said that adolescent/teen may share too much information about themselves: it can be as a result of i) peer pressure; ii) need to outshine other members of the group and gain a certain level of reputation within the group: iii) it may also be just for fun.

3 0
3 years ago
Marketing firms strive to ensure that people are aware of their products because people assume that if they have heard about cer
madam [21]

Answer:

Exposure Bias

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Basically, exposure bias states that consumer are more likely to buy brands which have higher brand recognition than new companies with no name recognition.

6 0
3 years ago
11. In the first quarter of 2010, U.S. advertisers spent $5.9 billion on online advertising. In the first quarter of 2011, they
oee [108]

Answer:

The percentage rate of growth from 2010 to 2011 is the 1237.3%

Explanation:

The percentage rate or growth for online advertising spend in 2011 compared to 2010 is obtained when calculating the following operations:

1. You must know what is the base figure you want to use to determine the percentage growth. In this case $5.9 Billion is the base figure you will use.

2. You want to know what is the figure with which you will determine the final growth. In this case is $73 billion.

3. You replace the values in the following formula:

percentage rate or growth =(( <u>   Final growth figure   </u> )  ) x 100

                                                         Base figure

percentage rate or growth =(( <u>  73   </u> )  ) x 100

                                                     5.9    

percentage rate or growth = 12.3728 x 100

percentage rate or growth = 1237.28

4. As you want to round your answer to one percentage place, then you round to .28 to .3 that is the next higher decimal number.

percentage rate or growth = 1237.3%

6 0
3 years ago
According to the erosion model of organizational commitment, the employee with the fewest emotional bonds is the most likely to
Likurg_2 [28]

The statement, according to the erosion model of an organizational commitment, the employee with the fewest emotional bonds is the most likely to quit, is true.

The erosion model explains that an organization's employee who have less or fewer emotional bonds tend to quit the organization because they do not feel or get involved in the organization, or they don't feel any attachment to it.

Here the social influence model states that suppose when two employees are closely related or have good terms, so if one of them quits their work, then the other one is more likely to follow them and leave the organization.

Hence, the erosion model suggests that employees with fewer bonds will be most likely to quit the organization.

To learn more about erosion model here:

brainly.com/question/28444776

#SPJ4

4 0
2 years ago
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