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Flura [38]
3 years ago
8

The next dividend payment by Skippy, Inc., will be $2.95 per share. The dividends are anticipated to maintain a growth rate of 4

.8%, forever. If the stock currently sells for $53.10 per share, what is the required return?
Business
1 answer:
mamaluj [8]3 years ago
7 0

Answer:

r = 0.103555  or  10.3555%  rounded off to 10.36%

Explanation:

Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,

P0 = D1 / (r - g)

Where,

  • D1 is dividend expected for the next period /year
  • g is the growth rate
  • r is the required rate of return or cost of equity

Plugging in the values for D0, P0 and g in the formula, we can calculate r to be,

53.1 = 2.95 / (r - 0.048)

53.1 * (r - 0.048) = 2.95

53.1r - 2.5488  =  2.95

53.1r  =  2.95+ 2.5488

r  =  5.4988 / 53.1

r = 0.103555  or  10.3555%  rounded off to 10.36%

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Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below.
Elis [28]

Answer:

–$32

Explanation:

Rosnan Industries' 2013 free cash flow (FCF)

<u>Details                                                                               $         </u>

Net income                                                                         713

Add Non-Cash Expenses:

Depreciation and amortization                                         100

(Increase) decrease in non-cash current assets:

Decrease in accounts receivable (300 - 275)                  25

Increase inventories (375 - 250)                                     (125)

Increase (decrease) in current liabilities:

Increase in total current liabilities (375 - 210)                  165

Capital expenditure:

Increase in net plant and equipment (2,300 - 1,490)     (810)

Depreciation and amortization                                      <u>  (100)  </u>

Free cash flow                                                                 <u>  (32)  </u>

Therefore, Rosnan's 2013 free cash flow (FCF) minus $32.

5 0
3 years ago
Match the Appropriate Items to the numbers associated with them Question 69 options: Federal Reserve Banks OPEC Oil Embargo begi
aleksklad [387]

Answer:

1. 12

2. 73

3. 33

4. 10

5. 25

6. 94

7. 7

8. 29

Explanation:

1. Federal Reserve Banks is made up of 12 banks.

2. OPEC Oil Embargo begins in 1973.

3. Federal Deposit Insurance Corporation is founded in 1933.

4. Effective Reserve Requirement Ratio is 10

5. Unemployment during the Great Depression reached a height of 25%

6. NAFTA was signed in 1994.

7. Board of Governor's members is 7.

8. The stock market crash that was a leading cause of the Great Depression occurs in 1929.

8 0
3 years ago
Firms that sell luxury products, custom-made products, and services (like wedding planners, home builders, etc) often take the t
Illusion [34]

Answer:

One to one marketing

Explanation:

One to one marketing refers to that form of marketing wherein the seller's focus is upon identifying and satisfying individual customer needs and creating products of value, tailor made for satisfying those needs.

Under such form of marketing, the seller stresses upon knowing individual choices and preferences and then serving the customer needs on individual or one to one basis.

One to one marketing is of two forms, personalization and customization. Under the former, the seller recommends products to customers based upon their past purchase history.

Under customization , the company provides an option to the customers to get a product customized as per their requirement and needs.

5 0
4 years ago
On December 31, there were 26 units remaining in ending inventory. Using the FIFO inventory valuation method. What is the cost o
mihalych1998 [28]

Answer:

The cost of the ending inventory is $3,960

Explanation:

Under fifo method of valuation the unit are expensed in cost of good sold statement in order of their purchase. The purchase price of unit purchase first are charged in profit and loss account when sale is made. So the cost cost assign to ending inventory will be that of last purchase made. Detail calculation is given below.

Total Stock Remaining =26 units

10 units at 160 dollars    = $ 1600

12 units at 150 dollars    = $ 1800

4 units at 140 dollars      = $ 560

Total value                      = $3,960

5 0
3 years ago
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Vera_Pavlovna [14]
I think that is is false 
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