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11111nata11111 [884]
2 years ago
11

Sand Point Corporation's common stock recently paid a dividend of $1.50. Investors require a 16% rate of return on this stock. S

and Point earns a 30% return on equity. The firm pays 60% of its earnings as dividends, and reinvests 40% of earnings in the firm. What is the value of the stock
Business
1 answer:
Nikolay [14]2 years ago
6 0

Answer: $42

Explanation:

Value can be found using the Gordon Growth model;

= (Current dividend * (1 + Growth rate)) / ( required return - growth rate)

Growth rate =  Retention ratio * Return on equity

= 40% * 30%

= 12%

Value = (1.50 * 1.12)/ ( 16% - 12%)

= $42

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A company sold equipment that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the equipment was $40,0
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Answer:

$0 Gain or Loss

Explanation:

Given that,

Original cost of the equipment = $100,000

Accumulated depreciation on the equipment = $40,000

Book value of the equipment:

= Original cost of the equipment - Accumulated depreciation on the equipment

= $100,000 - $40,000

= $60,000

Gain/Loss = Sale value - Book value of the equipment

                 = $60,000 - $60,000

                 = $0

Therefore, the company should recognize a $0 Gain or Loss.

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3 years ago
Brianna is the top-performing cheerleader and captain of the cheer team. Which of the following statements would result in the a
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C should be the correct answer if not it’s A
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Copybold Corporation is a start-up company that has a capital structure with a debt/assets ratio equal to 0.75. Copybold has no
galben [10]

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The value of the difference between the earnings per share (EPS) forecasts for Feast and Famine is $2.40

Explanation:

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For the data values from the question are used.

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2 years ago
Expensive high quality late harvest auslese, beerenauslese and trockenbeerenauslese wine is made from grapes which are typically
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A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 7 percent. Thi
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Answer:

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c. Yes, Industry will see entry or exits

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= $18 ÷ $200 × 100

= 9%

b. Company rate of profit - Rate of profit of economy

= 9% - 7%

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