Answer:
The stock price is $31.14
Explanation:
The value of Brickhouse stock today is the present values of future cash flows from the stock discounted using the required rate of return of 10.7% as the discount rate as done below:
Years cash flows discount factor Present values
1 $2.85 1/(1+10.7%)^1=0.903342367 $2.57
2 $2.34 1/(1+10.7%)^2=0.816027432 $1.91
3 & beyond *$32.67 1/(1+10.7%)^2=0.816027432 $ 26.66
total present values= $31.14
* the year 3 and beyond represents the terminal value of the stock,which is computed using the formula below
=D2*(1+g)/r-g
D2 is the year dividend of $2.34
g is the dividend growth rate of 3.3%
r is the required rate of return which 10.7%
terminal value=$2.34*(1+3.3%)/(10.7%-3.3%)
=2.41722
/0.074
=$32.67
Answer:
Indenture
Deferred call provision
Explanation:
Indenture is defined as the contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds.
A call provision is defined as the right that the issuer of a security has to call or redeem the security at certain times and under specific conditions.
The call provision in which the issuer is prevented from calling a portion or the entire issue for several years during the early years of the bond issue is called deferred call provision.
Answer:
The answer is D) None of these statement is relevant in the decision to further process the cream into butter.
Explanation:
option A) the amount paid to the farmers to purchase the unprocessed milk: this information is not relevant to further develop the cream and low fat milk to butter. It was already considered before this stage of production.
Option B) the cost of breaking down the unprocessed milk into cream and low-fat milk: this cost was already accounted for since the processing into cream and low fat milk is completed.
Option C) the portion of corporate fixed expenses that are currently being allocated to cream: This information is not going to help in the decision making for further processing.
When buying or selling a futures contract, the trader commits what amount of funds the amount of the initial margin. A futures contract is a legal agreement to buy or sell assets, mainly commodities, at a set price but it will be delivered and paid for later. Based on the definition of a futures contract, the trader will have to commit to the initial amount that was set to be traded when the legal agreement was made.
Answer: $3,940
Explanation:
Purchase from Diamond
The company received a discount of 2% because they paid within 10 days as per the terms of the sale.
Cost of inventory from Diamond:
= (Cost of goods - Returns) * (1 - 2%)
= (4,100 - 1,100) * 98%
= $2,940
Purchase from Club
Discount period expired so the full $1,000 is paid.
Total inventory cost:
= 2,940 + 1,000
= $3,940
