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
Allushta [10]
3 years ago
14

The risk-free rate of return is 10.5%, the expected rate of return on the market portfolio is 17%, and the stock of Xyrong Corpo

ration has a beta coefficient of 1.5. Xyrong pays out 50% of its earnings in dividends, and the latest earnings announced were $13 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 24% per year on all reinvested earnings forever. a. What is the intrinsic value of a share of Xyrong stock
Business
1 answer:
nadezda [96]3 years ago
5 0

Answer:

$88.24

Explanation:

The computation of the  intrinsic value of a share of Xyrong stock is shown below;

k = risk free rate of retunr+ beta[expected market rate of return - risk free rate of return]

= 10.5% + 1.5(17% - 10.5%)

= 20.25%  

Now

growth rate = b × ROE

= .5 × 24%

= 12%

Now the intrinsic value of the stock is

= (($13 × 50%)  × (1 + 0.12)) ÷ (0.2025 - 0.12)

= $88.24

You might be interested in
What is the present discounted value of $10,000 that is to be received in 2 years if the market rate of interest is 4 percent?
ddd [48]

Answer:

PV = $9,245.56

Explanation:

Giving the following information:

Future value (FV)= $10,000

Number of periods (n)= 2 years

Discount rate (i)= 4% = 0.04

<u>To calculate the present value (PV), we need to use the following formula:</u>

<u></u>

PV = FV / (1 + i)^n

PV = 10,000 / (1.04^2)

PV = $9,245.56

7 0
3 years ago
A 10-year corporate bond has an annual coupon of 9%. The bond is currently selling at par ($1,000). Which of the following state
iVinArrow [24]

Answer:

a. The bond’s expected capital gains yield is zero.

Explanation:

Since the bonds are issued at par so capital gains yield is zero.

5 0
3 years ago
Read 2 more answers
On January 1, 2020, Klosterman Company issued $500,000, 10%, 10-year bonds at face value. Interest is payable annually on Januar
Ede4ka [16]

Answer and Explanation:

Journal entry to record the issuance of the bonds.

A.

Jan 1

Dr cash $500,000

Cr bonds payable $500,000

B. Journal entry to record the accrual of the interest

Dec 31 2020

Dr Interest expense $25,000

Cr Interest Payable $25,000

C. Journal entry to record the payment of interest on January 1, 2021.

Dr Interest expense $25,000

Cr Cash $25,0000

Interest expense $500,000×10%×1/2=$25,000

3 0
3 years ago
A company had net income of $252,327. Depreciation expense is $21,821. During the year, Accounts Receivable and Inventory increa
Anettt [7]

Answer: Option (d) is correct.

Explanation:

Given that,

Net Income = $252,327

Depreciation expense = $21,821

Accounts Receivable increased by = $14,346

Inventory increased by  = $33,617

Prepaid Expenses decreased by = $3,079

Accounts Payable decreased by = $4,161

Loss on the sale of equipment = $5,398

Operating Income = Net Income + Depreciation expense - Accounts Receivable - Inventory + Prepaid Expenses - Accounts Payable + Loss on the sale of equipment

= $252,327 + $21,821 - $14,346 -  $33,617 + $3,079 - $4,161 + $5,398

= $230,501

7 0
3 years ago
Nour is usually the person who takes charge of the situation and gets people moving toward the group's objective. Nour probably
jonny [76]

Answer:

Power.

Explanation:

A leader can be defined as an individual who is saddled with the responsibility of controlling, managing and maintaining a group of people under him or her. Also, they provide guidance, support, supervision, administrative control, as well as acting as a role model or example to the employees working in an organization by being morally upright.

Generally, managers are typically involved in taking up leadership roles and as such are expected to be build a strong relationship between their employees or subordinates by creating a fair ground for effective communication and sharing of resources and information.

Some types of power expressed by leaders are referent power, coercive, etc.

In this scenario, Nour is usually takes charge of the situation and gets people moving toward the group's objective. Thus, Nour probably has a high need for power because he's more often than not in charge and control while getting his team members to achieve the set objective.

5 0
3 years ago
Other questions:
  • Select the correct answer.
    6·1 answer
  • Copywriters can correlate the visual and headline to the _____ step of the creative pyramid.
    12·1 answer
  • Which of these describes installment loans
    15·2 answers
  • The maintenance of money’s value is said to depend on the monetary authorities. What might the monetary authorities do to devalu
    15·1 answer
  • Choose the correct way to complete the sentences to explain how to draw concentric circles when doing a freehand sketch.
    13·1 answer
  • The equilibrium quantity in markets characterized by oligopoly is higher than in monopoly markets and higher than in perfectly c
    8·1 answer
  • In Mexico each unit of resource can produce either one professional computer or 3 computer games. Mexico has 30 units of this re
    6·1 answer
  • Franchising offers all the following benefits for franchisers except Group of answer choices franchise agreements require a cert
    15·1 answer
  • Cecilia has studied economics and knows about the value and investment potential of diamonds. the price of diamonds has recently
    14·3 answers
  • Healthy Foods has a book value per share of $32.68, earnings per share of $3.09, and a price-earnings ratio of 16.8. What is the
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!