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
A key use of a customer survey used in the operations consulting phase of problem definition is customer loyalty analysis. True
Marina86 [1]

Answer: True

Explanation: The operations consulting is the evaluation of the operational situation of the company, this helps us to improve the processes. If a customer survey is carried out, for example, regarding the quality of the products and the result is that raw materials or prices must be modified, if corrective measures are made, it is possible that customer satisfaction increases and therefore the fidelity.

8 0
3 years ago
On January 1, 2016, Ott Company sold goods to Fox Company. Fox signed a noninterest-bearing note requiring payment of $60,000 an
inessss [21]

Answer:

D. 321,600.

Explanation:

Present value is the current value of a future amount that is to be received or paid out.

Given:

Present value, P = $60000

Present value of ordinary annuity for the remaining 6 years = 4.36

The Present value, PV of the note is equal to the first payment + the Present value of ordinary annuity (all at 10%) of the remaining six payments

Sales revenue = $60000 + (60,000 × 4.36)

= $60000 + $261,600

= $321,600

Thus, sales revenue of $321,600.

3 0
3 years ago
The larger a given sector's contribution to a country's GDP is, the larger the impact of a shock to that sector on GDP is.
Nikitich [7]

Answer: True

Explanation:

When a sector contributes a significant amount to GDP suffers a shock, the GDP of the nation will be shocked as well. Proportionally it goes that the greater the shock to the sector, the greater the shock to the GDP.

For instance, Agriculture contributes a significant amount to GDP. If a drought were to hit that reduced harvests by 50%, the GDP will suffer a huge shock as well because the contribution from Agriculture will be significantly less.

6 0
2 years ago
Stephanie works 40 hours a week at a wage rate of ​$25. ​ This, her total weekly income is ​$1000. On this​ income, she pays tot
telo118 [61]

Stephanie's marginal tax rate is 15%.

<u>Explanation:</u>

The Average tax rate is 8%

she pays $3.75 as the tax on $25 which makes tax rate at this point                           =3.75/25

= 15%

The Marginal tax rate is the percentage of income that has to be paid as tax as a result of a change in the income bracket.

For instance, if tax rate until $1-$1000 is 10%

and for $1000 and above is 20%.

So for every $ earned over and above $1000.The marginal tax rate for that sum is 20%.

3 0
3 years ago
You are analyzing an investment property. You forecast the effective gross income to be $396,000. The operating expenses for thi
3241004551 [841]

Answer:

<em> $220,000</em>

Explanation:

Given:

Effective Gross Income(EGF) : $396,000

Operating Expenses(OE) : $176,000 ( Including $4,400 reserve for replacements)

To Find Net Operating Income(NOI):

NOI = EGF - OE

NOI = $396,000 - $176,000

NOI = $220,000

So the Net Operating Income is $220,000

7 0
2 years ago
Other questions:
  • Which of the following is a valid reason for governmental entities to engage in business-type activities?(A) The entity does not
    7·1 answer
  • When teresa carleo, the owner of plant fantasies, started her business, staying with the business for the first few years was di
    11·1 answer
  • The balance of the Cost of Goods Sold account at the end of the year represents:(A) The cost of inventory not sold in the curren
    15·1 answer
  • Why do managers of financial institutions care so much about the activities of the Central <br>Bank​
    8·1 answer
  • The placement of proof-point information on product packaging is part of which of the four ps?
    15·1 answer
  • Banks channel money from savers to borrowers to _____. investors scarce resources the government
    8·1 answer
  • Firms must consider the possible reaction of rivals to their own decisions and actions in
    6·1 answer
  • Which of the following data is used to determine credit scores?
    13·2 answers
  • Evaluation of the amount of costs incurred should be based on the actual volume of activity rather than the planned volume of ac
    5·1 answer
  • Why was agricultural sector declared as critical industry and exempt from the hardest lockdown regulations
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!