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Leona [35]
3 years ago
11

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because t

he firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $15 per share 10 years from today and will increase the dividend by 5 percent per year thereafter.
If the required return on this stock is 15 percent, what is the current share price?
Business
1 answer:
dimulka [17.4K]3 years ago
8 0

Answer:

$51.25

Explanation:

P9 = Next dividend / Required rate r - Growth rate g

P9 = $15 / 14% - 5%

P9 = $15 / 9%

P9 = $166.67

Po = P9 / (1 - Required rate of return)^9

Po = $166.67 / (1 + 0.14)^9

Po = $166.67 / 3.2519

Po = $51.25

So, the current stock price is $51.25.

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Sabrina Duncan had gross earnings for the pay period ending 10/15/16 of $5,835. Her total gross earnings as of 9/30/16 were $104
ivann1987 [24]

Answer:

option (A) $212.97

Explanation:

Data provided in the question:

Gross earnings for the pay period ending 10/15/16 = $5,835

Total gross earnings as of 9/30/16 = $104,400

Social Security tax rate = 6.2%

Now,

Total earnings

= Gross earnings for the pay period ending 10/15/16 + Total gross earnings as of 9/30/16

=  $5,835 + $104,400

= $110,235

since,The Social Security taxes are on a maximum earnings of $106,800 per year

therefore,

Sabrina's Social Security withheld from her 10/15/16 paycheck will be

= ( Total earnings - $106,800 ) × Social Security tax rate

= ( $110,235 - $106,800 ) × 0.062

= $3,435 × 0.062

= $212.97

Hence,

The answer is option (A) $212.97

7 0
3 years ago
Phillips Equipment has 80,000 bonds outstanding that are selling at par. Bonds with similar characteristics are yielding 7.5%. T
ollegr [7]

Answer:

A) 10.15%

Explanation:

Cost of equity (Re) = 14.06% or 0.1406

cost of preferred stock (Rp) = 7/65 = 0.10769

cost of bonds (Rb) = 7.5% or 0.075

 outstanding shares = 2.5 million shares x $42 = $105 million

bonds outstanding = $1,000 x 80,000 bonds = $80 million

preferred stock = $65 x 750,000 = $48.75 million

corporate tax rate = 38% or 0.38

total market value of equity + debt (in millions) = $105 + $48.75 + $80 = $233.75

WACC = [(outstanding shares / total market value) x Re] + [(preferred stock / total market value) x Rp] + {[(bonds outstanding / total market value) x Rb] x (1 - tax rate)}

WACC = [($105m / $233.75m) x 0.1406] + [($48.75m / $233.75m) x 0.10769] + {[($80m / $233.75m) x 0.075] x (1 - 0.38)}

WACC = 0.06316 + 0.02246 + 0.01591 = 0.10153 or 10.15%

6 0
3 years ago
ABC Brothers' cleaning products and equipment are sold to consumers and commercial cleaning companies in Best Supply's janitoria
Karolina [17]

Answer:

Distributor.

Explanation:

A distributor is a whole seller nominated by a company to most times exclusively redistribute the company products to all retailers and institutions in a designated territory.

A distribution may be required under three circumstances:

-for entering into a new town.

-for additional coverage in the same town.

-for replacing an existing distributor.

The expectations from the distributors must be defined right at the beginning so that the perspective candidates can be advised and secondly to get the right kind of distributors.

3 0
3 years ago
Profit maximization occurs when:
lianna [129]

Answer:

The correct answer is option B.

Explanation:

Profit maximization refers to the situation when a firm is able to maximize the total profit that it could earn through the production of goods and services.  

The total profit is maximized when the marginal profit is zero or when the marginal revenue is equal to marginal cost. The marginal profit is the difference between marginal revenue and marginal cost.  

If the marginal revenue is greater than the marginal cost the firm should increase production till both are equal.  

In case, marginal revenue is less than the marginal cost the firm should stop producing more and reduce production till both are equal.

3 0
3 years ago
Which of the following factors will cause the​ long-run aggregate supply curve to shift to the​ right?
dlinn [17]
D.All of the above
Because all of the above will cause it
6 0
3 years ago
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