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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

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A chemical company spent $ 530 comma 000 to produce 150 comma 000 gallons of a chemical that can be sold for $ 5.00 per gallon.
solmaris [256]

Answer:

If the company decides to process it further, it will increase operating income $68,000

Explanation:

Selling the chemical on processing,

the Sales will be = Gallons of chemical produce × Selling price per gallon

                            = 150,000 × $5

                            = $750,000

Cost of Processing the chemical = $530,000

Operating Income on selling the chemical:

= Sales -  Cost of Processing the chemical

= $750,000 - $530,000

= $220,000

Total cost incurred to process the chemical into a weed killer:

=  Cost of Processing the chemical +

= $532000 + $260,000

= $792,000

Sales of 150,000 gallons of weed killer:

= Selling price per gallon × Chemical produce

= $7.20 × 150,000 gallons

= $1,080,000

Operating income on processing to weed killer:

= Sales of 150,000 gallons of weed killer - Total cost incurred to process the chemical into a weed killer

= $1,080,000  - $792,000

= $288,000

So, If the company decides to process it further, it will increase operating income by:

= Operating income on processing to weed killer - Operating Income on selling the chemical

= $288,000 - $220,000

= $68,000

5 0
3 years ago
Had columbus's voyage acquired wealth for spain, he was supposed to keep what amount?
kotegsom [21]
He was supposed to keep 10%.
The 10% share was one of the columbus demand' when both columbus and the crown agreed to the terms for his voyage fundinsg.
But, since <span>he had been relieved of his duties as governor, the Crown no longer feel obligated to honour the term of the contract.</span>
5 0
3 years ago
Different prices are commonly charged to different groups of consumers for tickets at movie theaters, whereas the groups are cha
ankoles [38]
I think the explanation of this manner is that the concession items have a high-profit margin. It has more sales than the theater tickets. So to avoid the possible losses of income, the theater decides to make the prices of each item of concession stand must be the same to a different group of people. 
4 0
3 years ago
Will shoprite manager makes informed decision
SVETLANKA909090 [29]

Answer:

Yes

Explanation:

Because of he really wants to sees his company growing up to another level

7 0
1 year ago
The corporate charter of Llama Co. authorized the issuance of 14 million, $1 par common shares. During 2021, its first year of o
Gemiola [76]

Answer:

Llama Co.

The amount that Llama should report as Additional Paid -in Capital in its December 31, 2021 balance sheet is:

= $36 million.

Explanation:

a) Data and Analysis:

Authorized capital, 14 million at $1 par common shares

January 1: Issued 5 million at $19 per share:

Debit Cash $95 million

Credit Common Stock $5 million

Credit Paid-in Capital in Excess of Par-Common $90 million

June 3: Purchased 6 million shares of treasury stock at $33 per share:

Debit Treasury Stock $6 million

Debit Paid-in Capital in Excess of Par-Common $192 million

Credit Cash $198 million

December 28: Sold the 6 million shares of treasury stock at $24 per share:

Debit Cash $144 million

Credit Treasury Stock $6 million

Credit Paid-in Capital in Excess of Par-Common $138 million

Summary of Paid-in Capital in Excess of Par-Common Account:

January 1: Cash   $90 million (Credit)

June 3: Cash       (192 million) (Debit)

Dec. 28: Cash      138 million (Credit)

Dec. 31: Balance $36 million (Credit)

3 0
3 years ago
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