Answer:
$8.78
Explanation:
National advertising made dividend payment of $0.75 per share
The dividend is expected to grow at a constant rate of 6.50%
= 6.50/100
= 0.065
The company beta is 1.85
The required return on the market is 10.50%
The risk free rate is 4.50%
The first step is to calculate the rate of return using the CAMP model
R = Risk free rate+beta(market return-risk free rate)
= 4.50%+1.85(10.50%-4.50%)
= 4.50%+1.85×6%
= 4.50%+11.1
= 15.6
Required rate of return= 15.6
Therefore the current stock price can be calculated as follows
Po= Do(1+g)/(r-g)
Where Do= 0.75, g= 0.065, r= 15.6
Po= 0.75(1+0.065)/(0.156-0.065)
Po= 0.75(1.065)/0.091
Po= 0.7987/0.091
Po= $8.78
Hence the company current stock price is $8.78
Answer:
$31. 15
Explanation:
From the question we are required to find the new stock price considering that no market imperfections or tax effects exist.
stock dividend = 22 percent
Amount per share = $38
At a a stock dividend of 22 percent, new share price would be
= $38(1 / 1.22)
= $31.15
Answer: When a company is able to offer a good product and enjoy strong customer demand, a franchise owner not only is able to take advantage of the corporate identity but its strong customer base, as well.
A franchise is a kind of a license which allows the party who acquires it (franchisor) access to an business' (franchisor's) proprietary knowledge and processes in order to sell products or provide services under the franchisor's name.
A franchisee associates itself with a well proven business model and gains access to the franchisor's customer base. Additionally, the franchisor provides assistance by training the franchisee and his personnel to provide a uniform product or service experience to customers across all the stores.
All these factors help in eliminating business risk and this constitutes a real advantage to a franchise.
Cost-plus pricing<span>, also known as mark-up </span>price<span>, takes place when a firm calculates its unit costs and then adds a percentage profit to determine </span>price<span>.</span>
