Answer:
0.11 or 11%
Explanation:
The computation of the required rate of return is given below:
Required Rate of Return is
= Next Year Dividend ÷ Current Market Price + Growth Rate
= $3.15 ÷ $52.50 + 0.05
= 0.06 + 0.05
= 0.11 or 11%
working note
Given that
Current Market Price = $52.50
As we know that
Growth Rate = Return on Equity × Retained Earning Ratio
Now
Return on Equity = EPS ÷ Book Value of Share
= $5 ÷ 40
= 12.50%
So,
Retained Earning Ratio is
= 1 - Dividend Payout Ratio
= 1 - 0.60
= 0.40
And,
Dividend Payout Ratio = DPS ÷ EPS
= $3 ÷ $5
= 0.60
Now
Growth Rate = 12.50% × 0.40
= 5%
So,
Next Year Dividend = Dividend Recently paid × (1 + growth rate )
= $3 × 1.05
= $3.15
There are three main financial statements that can be affected by buying a piece of equipment for a company.
They are: (1) balance sheets; (2) income statements; and (3) cash flow statements
Balance sheets show what a company owns and what it owes at a fixed point in time so buying a piece of equipment will show an increase in the company’s assets and decrease in cash Income statements which shows how much money a company made and spent over a period of time will report an increase in the expenses resulting to a lower net income.
Cash flow statements which show a decrease in net cash due to buying of the equipment.
40 percent increase
(New # - Old # ) / Old # x 100
((7000-5000) / 5000 )x 100
.4 x 100 = 40
Answer:
Statement is True
Explanation:
By considering cafeteria-style benefits plan, the firm customizes the benefits plan to the employees by allowing them to choose from a variety of benefits.
