Answer:
The expected/required rate of return is 13.8125%.
Explanation:
The stock is a constant growth stock as the dividends are expected to grow constantly forever. The constant dividend growth model of DDM is used to calculate the price of such a stock today. As we already know the price, we will use the formula of the constant growth model to determine the required rate of return. The formula for constant growth model is:
P0 or Price today = D1 / r - g
Plugging in the available known values,
16 = 1.25 / (r - 0.06)
16 * (r - 0.06) = 1.25
16r - 0.96 = 1.25
16r = 1.25 + 0.96
r = 2.21 / 16
r = 0.138125 or 13.8125%
Answer:
The variable overhead rate variance for the month is $2,548 favorable
Explanation:
In this question, we use the formula of the variable overhead rate variance which is shown below:
= Actual level of activity × (Standard rate - Actual rate )
= 9,100 × ($7.60 - $7.32)
= 9,100 × 0.28
= $2,548 favorable
The actual rate is not given in the question, so we have to compute by using the formula which is given below:
= Actual total variable manufacturing overhead ÷ Actual level of activity
= $66,600 ÷ 9,100
= $7.32
Hence, the variable overhead rate variance for the month is $2,548 favorable
Answer:
It would be better to enter a new business area by acquisition when a company is considering implementing horizontal integration or when they are pursuing vertical integration and the company is lacking the distinctive competencies to establish a quick presence and reputation. Acquisition allows a company to purchase quicker than it takes to establish its own company that is similar. Also, acquisitions are less risky because there is less commercial uncertainty and the company is able re-search the turn get are interested and get have unpublished reputation, lastly, they are attractive because there are high barriers to entry
Explanation:
Answer:
A. Forecast for July = 42.
B. Forecast for August = 42.45
C. Because of seasonality in the banking industry.
Explanation:
A. Forecast for July = Forecast for June + Smoothing constant x (Forecasting error)
= 42 + 0.15 (42-42) = 42
B. Forecast for August = Forecast for July + 0.15 (Forecasting error)
= 42 + 0.15 (45-42) = 42.45
C. Because there is a great deal of seasonality in the processing requirements of banking industry, this forecasting method (exponential smoothing) might not be appropriate for this situation.
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