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Strike441 [17]
3 years ago
15

Commercial Construction Builders has a beta of 1.34, a dividend growth rate of 2.1 percent for the foreseeable future, a stock p

rice of $15 per share, and an expected annual dividend of $0.45 per share next year. The market rate of return is 12.8 percent and the risk-free rate is 4.2 percent. What is the firm's average cost of equity?​
Business
1 answer:
Effectus [21]3 years ago
7 0

Answer:

10.412%

Explanation:

The computation of the average cost of equity of the firm is shown below;

The Cost of equity as per CAPM is

= risk free rate + beta × (market rate - risk free rate)

= 4.2 + 1.34 × (12.8 - 4.2)

= 15.724%

Now the Cost of equity as per growth model is

= (D1 ÷ Current price) +Growth rate

= [0.45 ÷ 15] + 0.021

= 5.1%

Now the Average Cost of equity is

= (15.724 + 5.1) ÷ 2 2

= 10.412%

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1. In each of the following situations, identify which of the twelve principles is at work
aleksklad [387]

Answer:

a. The true cost of something in its cost of opportunity

Explanation:

Opportunity cost is the cost which is defined as the cost or expense of one item which is lost in order to get the opportunity to do or to consume something else. In simple words, it is the value or the cost of the next best available alternative.

So, when the person select to bought the textbooks through Chegg instead paying the higher price for the same books through the bookstore. Under this situation, the principle applies is the cost of something in its opportunity cost.

8 0
3 years ago
Dakota Company had net sales (at retail) of $260,000.
disa [49]

Answer:

$35,860  

Explanation:

The computation of the ending inventory using the retail inventory method is shown below

Particulars                      Cost          Retail

Opening Inventory(A)   $63,800    $128,400

Purchases(B)                 $115,060    $196,800

Goods available

C=(A-B)                         $178,860     $325,200

Cost ratio

($178,860 ÷ $325,200 × 100) 55%  

Sales at retail (D)                            $260,000

End, Inventory at Retail                     $65,200

($325,200 - $260,000)

End, Inventory at Cost    $35,860  

($65,200 × 55%)

8 0
3 years ago
The CEO of Widgets, Inc., must decide whether to take the company public. To better understand the potential advantages and disa
nordsb [41]

Answer:

the dialectic method

Explanation:

Based on the information provided within the question it can be said that the process that is being used is known as the dialectic method. This is a form of research in which competing ideas, perspectives, or arguments are analyzed in order to understand the potential truths, advantages, and disadvantages of the aspects being discussed.

7 0
3 years ago
On March 1, 2015, Landon Company acquired real estate on which it planned to construct a small office building. The company paid
Murljashka [212]

Answer:

The amount to be reported as the cost of the land is  $101,000

Explanation:

Given information

Paid cash - $90,000

Cost of property $7,600

Salvaged materials - $1,700

Attorney's fee for work concerning the land purchase -  $1,100

Real estate broker's fee -  $4,000

Architect's fee - $7,800    

Put in driveways and a parking lot - $14,000

For computing the amount of the cost of the land, the Architect's fee and Put in driveways and a parking lot is not considered as it is not related to the land expenses. The computation is shown below

= Cash amount + Cost of property - Salvaged materials + Attorney's fee + Real estate broker's fee

= $90,000 + $7,600 - $1,700 + $1,100 + $4,000

= $101,000

Thus, the amount to be reported as the cost of the land is  $101,000

4 0
3 years ago
Transfer payments alter household income, but they do not reflect the economy's production.
Dominik [7]
I think it might be true, I’m so sorry if I’m wrong
8 0
2 years ago
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