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katrin2010 [14]
3 years ago
15

Holtzman Clothiers's stock currently sells for $40.00 a share. It just paid a dividend of $1.75 a share (i.e., D0 = $1.75). The

dividend is expected to grow at a constant rate of 7% a year. What stock price is expected 1 year from now? Round your answer to the nearest cent. $ What is the required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. %
Business
1 answer:
VladimirAG [237]3 years ago
5 0

Answer: See explanation

Explanation:

a. What stock price is expected 1 year from now?

This will be calculated as:

= P0 × (1 + g)

where,

P0 = $40

g = growth rate = 7%

= P0 × (1 + g)

= 40 × (1 + 7%)

= 40 × (1 + 0.07)

= 40 × 1.07

= $42.80

b. What is the required rate of return?

This will be:

= (D1 / P0) + g

where D1 = D0 × (1+g) = 1.75 × (1+0.07) = 1.75 × 1.07 = 1.8725

= (D1 / P0) + g

= (1.8725 / 40) + 0.07

= 0.1168

= 11.68%

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2 years ago
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Download docx
7 0
3 years ago
Harrelson Company manufactures pizza sauce through two production departments: Cooking and Canning. In each process, materials a
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Solution:

Instructions Journalize the April transactions:

Date                           Account Titles and Explanation

4/30                              Work in Process—Cooking

                                     Work in Process—Canning

                                                     Raw Materials Inventory

4/30                              Work in Process—Cooking

                                     Work in Process—Canning

                                                              Factory Labor

4/30                             Work in Process—Cooking

                                   Work in Process—Canning

                                                  Manufacturing Overhead

4/30                             Work in Process—Canning

                                    Work in Process—Cooking

Cooking and out the debits

Debit                               Credit          

22,800

10,900                             33,700      

9,400

7,230                              16,630

33,800

28,100                            61,900

55,900                          

                                      55,900

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3 years ago
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monitta

Answer:

If Mary and Tim specialize in the good in which they have a comparative​ advantage, ______.

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Explanation:

a) Data and Calculations:

Mary's opportunity cost of making a cake = 2 pies

She can make additional 5 (10/2) cakes instead of making pies

This will increase her cakes to 25 a day (20 + 5)

Tim's opportunity cost of making a cake = 4 pies

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When they specialize there will be 25 cakes and 60 pies produced in a day instead of 30 cakes and 30 pies.

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Answer:

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Using the CAPM equation, we first calculate the required rate of retunr on the stock.

The equation for CAPM is,

r = rRF + Beta * rpM

Where,

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r = 0.05 + 0.04

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P0 = Dividend / r

P0 = 1.8 / 0.09

P0 = $20

3 0
3 years ago
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