1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
DerKrebs [107]
3 years ago
8

Countess Corp. is expected to pay an annual dividend of $4.57 on its common stock in one year. The current stock price is $73.59

per share. The company announced that it will increase its dividend by 3.70 percent annually. What is the company's cost of equity
Business
2 answers:
nydimaria [60]3 years ago
7 0

Answer:

The company's cost of equity is 9.91%

Explanation:

The cost of Equity is the investor's required return and according to the given information D1 =$4.57, SP =$73.59, g = 3.70% The DDM model which derives the current price of the stock by discounting it future dividends will be used in this calculation

SP = D1/ r - g

73.59 = 4.57/r -3.70%

73.59*(r-3.70%) =4.57

73.59*(r-3.70%)/73.59=4.57/73.59

r- 3.70% = 4.57/73.59

r = 4.57/73.59 +3.70

r =0.0991/9.91%

   

Serjik [45]3 years ago
3 0

Answer:

The cost of equity is 9.91%

Explanation:

The constant growth model of the DDM is used to calculate the price of the share or the fair value per share based on a constant growth in dividends and the required rate of return which is also known as cost of equity.

Plugging in the available values in the formual we can calculate the cost of equity or the required rate of return.

73.59 = 4.57 / (r - 0.037)

73.59 * (r - 0.037) = 4.57

73.59r - 2.72283 = 4.57

73.59r = 4.57 + 2.72283

r = 7.29283 / 73.59

r = 0.0991 or 9.91%

You might be interested in
The number of years a person that age is expected to have left to live on average is known as?
aleksley [76]
Perhaps, life expectancy...  That may be your answer.

6 0
3 years ago
Read 2 more answers
Suppose the marginal cost curve in the short run first decreases and then increases. If marginal cost is decreasing, _____ must
In-s [12.5K]

Answer: D. marginal product; increasing; average variable cost; decreasing

Explanation:

The Marginal product curve is hump-shaped and the marginal cost curve is U-shaped because these two move in opposite directions to each other.

If the marginal cost is decreasing therefore, the marginal product must be increasing. If the marginal cost is decreasing and the marginal product is increasing, average variable cost will have to fall because every additional unit produced incurs less cost so the average has to fall as well.

6 0
3 years ago
MasterCard managers are motivated to increase (1) the number of individuals who have and use a MasterCard credit card, (2) the n
frez [133]

MasterCard could use the data warehousing strategy by making its cards acceptable for any transaction in any place.

Data warehouse plays an important role in the competitive market for MasterCard. As the data has been turned into Business Intelligence (BI), which enables individuals, banks and companies to make strong decisions with regard to payment through electronic means.

The data warehousing could be used by MasterCard to gain a distinct advantage over its competitors. As previously Visa represents around 50% of charges for products sold overall while MasterCard was only at 25%.

An example of using Data warehousing is such that banks can issue MasterCard which if used on Aircraft or Restaurants then these banks can use this data to arrange offers and other benefits to motivate cardholders to spend more with their MasterCard. They could even offer limited time openings such as to pay for room or buy exclusive items during shopping.

5 0
3 years ago
On June 13, the board of directors of Siewert Inc. declared a 2-for-1 stock split on its 60 million, $1.00 par, common shares, t
Verizon [17]

Answer:

1. Dr Stock dividends $60 million

Cr Common stock $60 million

2. $1

Explanation:

Preparation of the journal entry that summarizes the declaration and distribution of the stock split

Journal Entries for Siewert Inc

(In millions)

1. Based on the information given we were told that On June 13, the board of directors of the company declared a 2-for-1 stock split on its 60 million which means that the Journal entry will be recorded as :

Dr Stock dividends $60 million

Cr Common stock $60 million

(To record issue of stock dividend)

2. The Par value per share after split =$1 reason been that split are often in form of stock dividend.

8 0
3 years ago
Epa rules require capture of 80% of the refrigerant from a small appliance sealed system with a non-operating compressor if tech
ki77a [65]
Epa rules require capture of 80% of the refrigerant from a small appliance sealed system with a non-operating compressor if technicians are using: <span>Self-contained (active) process. </span>This requirement makes it easier for the technicians to install a safe and environmentally friendly product for the customer and speed up the time of the procedure.
3 0
3 years ago
Other questions:
  • An example of an intangible asset is Question 8 options: land. a building. assembly cost. a patent.
    13·1 answer
  • Here are data on two stocks, both of which have discount rates of 8%: Stock A Stock B Return on equity 8 % 5 % Earnings per shar
    6·1 answer
  • The supplies inventory on August 1, 2017 was $9,350. Supplies costing $24,150 were acquired during the year and charged to the s
    13·1 answer
  • Bonita Corporation’s December 31, 2018 balance sheet showed the following:
    12·1 answer
  • A client asks his accountant to ignore a mistake which overstated the accounts receivable account. The accountant decides that t
    5·1 answer
  • The first two closing entries to the Income Summary account indicate a debit of $57,750 and a credit of $69,700. The third closi
    13·1 answer
  • La Tortilla is the only producer of tortillas in Santa Teresa. The firm produces 10,000 tortillas each day and has the capacity
    8·1 answer
  • The ABC Lawn Company aims for a high number of clients that result in high profits. To meet its goal ABC markets its landscaping
    7·1 answer
  • Assume the Crash Davis Driving School has a 13.1 percent ROE and a 30 percent payout ratio. Required: What is the sustainable gr
    13·1 answer
  • If a household's income rises from $46,000 to $48,000 and its consumption spending rises from $38,00 to $39,500 then the MPC is
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!