Answer:
$48.2
Explanation:
The increase in dividend is 3.9%
= 3.9/100
= 0.039
The recently paid dividend is $3.62
The required return is 11.7%
= 11.7/100
= 0.117
Therefore the price per share of the company stock can be calculated as follows
= 3.62(1+0.039)/0.117-0.039
= 3.62(1.039)/0.078
= 3.761/0.078
= 48.2
Hence the price per share is $48.2
Answer:
Quick ratio = Current assets - Inventory/Current liabilities
= $480,000 - $340,000/$40,000
= 3.5
Current assets = $120,000 + $340,000 + $20,000 = $480,000
Current liabilities = $20,000 + $20,000 = $40,000
Explanation:
Explanation: Quick ratio is the ratio of liquid assets to current liabilities. Liquid assets are current assets less inventory. Liquid assets amounted to $140,000 while current liabilities are $40,000. The division of liquid assets by current liabilities gives quick ratio.
Answer:
The costs of a “freebie” item includes resources to make, a person's labor, and the cost to the store to offer it to us as free.
Explanation:
Answer: Option (2)
Explanation:
Paid in capital is referred to as or known as amount of the capital which is paid in by the investors during the preferred or common stock issuance, including par value of shares in addition to the amount in excess of the par value. The paid in capital tends to represent funds which are raised by organization through selling of equity.
Answer:
The expected price of the stock is $122.03
Explanation:
To calculate the expected price of the stock at the end of the year or at Year 1, we first need to determine the required rate of return on the stock. We will use the CAPM equation to calculate the required rate of return.
The required rate of return is calculated as,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate
- rM is the return on market
r = 0.05 + 1 * (0.14 - 0.05)
r = 0.14
We already have the price of the stock today, the D1 and the required rate of return. Using the constant dividend growth model of DDM, we calculate the growth rate in dividends to be,
P0 = D1 / (r - g)
115 = 9 / (0.14 - g)
115 * (0.14 - g) = 9
16.1 - 115g = 9
16.1 - 9 = 115g
7.1 / 115 = g
g = 0.0617 or 6.17%
Using the same formula and replacing D1 with D2, we can calculate the price of the stock at the end of the year or at start of Year 1.
P1 = 9 * (1+0.0617) / (0.14 - 0.0617)
P1 = $122.03
