Answer:
a)
P₀ = Div₁ / (Re - g)
- P₀ = current stock price = ?
- Div₁ = next dividend = $8
- Re = equity cost = 10%
- g = constant growth rate = 5%
P₀ = $8 / (10% - 5%) = $8 / 5% = $160
b)
EPS = $12
Return on equity (ROE) = g / b
b = retention rate = 1 - payout ratio = 1 - ($8/$12) = 0.333
g = 5%
ROE = 5% / 0.333 = 15%
c)
Present value of growth opportunity (PVGO) = P₀ - EPS/Re
- P₀ = $160
- EPS = $12
- Re = 10%
PVGO = $160 - $12/10% = $160 - $120 = $40 per share
Answer:
B. a cartel
Explanation:
A cartel is a group of independent producers who collude to promote and protect their trade interests. Large producers in the same industry form cartels to manipulate supply and fix prices. Through the cartel, the large producers set prices that guarantee maximum profits for their members. The cartel eliminates price competition among the major producers in the industry.
Answer:
Using the gross profit method, the cost of goods sold would be:
$42,500
Explanation:
Gross margin ratio of the company is 15%. Refer the formula:
Gross margin = Gross profit/Revenue (or net sales)
= (Net sales- Cost of good sold)/Net sales
Using the gross profit method and from the formula,
Cost of good sold = Net sales - Net sales x Gross margin
= Net sales x (1 - Gross margin)
= $50,000 x (1-0.15) = $50,000 x 0.85 = $42,500
Answer:
An effective marketing campaign will help a company achieve its marketing objectives and increase its profitability.
Explanation:
When a company wants to publicize its products and services and maintain a good relationship with its consumers, it develops marketing campaigns, which, when aligned with the values of the company and its target audience, will generate attention for the brand, generate engagement for the company. increase market positioning, increase brand value, attract customers, etc.
Therefore, to create an effective marketing campaign it is necessary to follow some essential steps.
1- Choose the essential objective of the marketing campaign and thus start to develop the idea for the company's promotional communication.
2- Choosing the ideal channel for the transmission of the message, it is necessary to know where your potential audience is most present, whether it is on social media, in the newspaper, on TV, etc.
3- Choose the ideal campaign concept.
4- Monitor the results of the marketing campaign after it is aired.
Answer:
Avoidable interest is $272,064.
Explanation:
Compute the interest on new notes payable, using the equation as shown below:
Interest = Principalof 13% note payable × Rate of interest
=$1,059,300×13%
=$137,709
Hence, the interest of new notes payable is $137,709.
Compute the interest of outstanding notes payable using the equation as follows:
Interest = Outstanding principal × Weighted average interest rate
=$1,268,700×10.59%
=$134,355
Hence, the interest of outstanding principal which is needed to be considered for the calculation of avoidable interest is $134,355
Avoidable interest is $272,064.
