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oee [108]
4 years ago
5

Exercise Bicycle Company is expected to pay a dividend in year 1 of $1.20, a dividend in year 2 of $1.50, and a dividend in year

3 of $2.00. After year 3, dividends are expected to grow at the rate of 10% per year. An appropriate required return for the stock is 14%. The stock should be worth ________ today.
A) $33.00
B) $39.86
C) $55.00
D) $66.00
E) $40.68
Business
1 answer:
prisoha [69]4 years ago
3 0

Answer:

E.  $40.68

Explanation:

The computation of the stock worth today is shown below:

= (Dividend in year 1 ÷ 1 + required rate of return^number of years ) + (Dividend in year 2 ÷ 1 + required rate of return^number of years) + (Dividend in year 3 ÷ 1 + required rate of return^number of years)  + (Dividend in year 3 ÷ 1 + required rate of return^number of years) × (1 + growth rate) ÷ (required rate of return - growth rate)

= $1.2 ÷ 1.14 + $1.5 ÷ 1.14^2 + $2 ÷ 1.14^3 + $2 ÷ 1.14^3 × (1 + 10%) ÷ (14%-10%)

= $40.68

We simply applied the above formula

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Answer:

Option (b) 15.0 percent

Explanation:

Data provided in the question:

Value of the bonds issued in  Philippines pesos (PHP) at par = 500,000

Coupon rate = 15 percent

Now,

In the given question the bonds are issued at par.

Also, over the life of the bonds the exchange rate remains stable and until maturity the bonds are held

Therefore,

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3 years ago
How does the timing of adjusting entries differ from the accounting for daily transactions? Adjustments are made at the beginnin
BigorU [14]

Answer:

Adjustments are made at the end of the accounting period because making them on a daily basis would be inefficient.

Explanation:

Adjusting entries are adjustments made on accounts to recognize revenue or expenses that were not properly recorded before. They are usually done at the end of the month or the end of the accounting period to balance debit and credit records.

While you record daily transactions the same day in which they occur.

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4 years ago
A firm has $848 in inventory, $1,740 in fixed assets, $668 in accounts receivable, $416 in net working capital, and $231 in cash
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Answer:

$1,331

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Answer:

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