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Novay_Z [31]
3 years ago
5

Ackert Company's last dividend was $4.00. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which d

ividends are expected to grow at a rate of 8.0% forever. The firm's required return (rs) is 12.0%. What is the best estimate of the current stock price?a. $87.00b. $89.87c. $80.31d. $104.21e. $95.61
Business
1 answer:
Elza [17]3 years ago
5 0

Answer:

First we need to use the ddm model when the growth rate is constant and find the price then,because the ddm model cannot be used when the growth rate  is not constant and then discount it back to present value at 12% which is the required return.

Last dividend = $4

Dividend one year from now = 4*1.015=4.06

Dividend 2 years from now = 4.06*1.015=4.12

Growth rate 2 years from now = 8%

R= 12%

Price = D*(1+G)/(R-G)

=4.12*(1+1.08)/(0.12-0.08)=4.45/0.04= 111.26

Price of stock 2 years from now $111.26, now we need to discount it to the present value. 111.26/1.12^2=88.69

Best estimate = b. $89.87

Explanation:

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A company that makes which of the following types of products would best be suited for a job costing system?a. Fruit juice b. Ba
vovangra [49]

Answer:

custom jewelry              

Explanation:

A job costing system refers to the process of collecting data about the expenses related to a particular job in manufacturing or service. To apply the cost information to a client underneath an agreement where expenses are refunded, this information might be needed.

The knowledge is also helpful in determining the quality of the forecasting method of a business, which ought to be able to cite rates allowing for a healthy profit. You could also use the details to attribute unchanging expenses to the finished goods.

5 0
3 years ago
When originally purchased, a vehicle costing $23,040 had an estimated useful life of 8 years and an estimated salvage value of $
Novosadov [1.4K]

Answer:

$5,360

(not given in the options)

Explanation:

Depreciation is the systematic allocation of cost to an asset based on estimates. It is given as

Depreciation = (cost - salvage value)/useful life

When originally purchased, a vehicle costing $23,040 had an estimated useful life of 8 years and an estimated salvage value of $1,600

Annual depreciation = ($23,040 - $1,600)/8

= $2,680

After 4 years

Accumulated depreciation = 4 × $2,680

= $10,720

The net book value then

= $23,040 - $10,720

= $12,320  

Since the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value

New depreciation = ($12,320  - $1,600)/2

= $5,360

The depreciation expense in year 5 equals $5,360

8 0
3 years ago
Green Frog is an environmentally friendly firm in the cosmetics industry. Even though Green Frog is environmentally friendly, th
kakasveta [241]

Answer:

D) Growth in earnings per share averaging 15% or better annually for the next five years

Explanation:

First of all, objectives must be well defined and measurable. That is why increasing profitability is a good idea but not a very good strategic objective, since a 0.00001% growth in profits will still comply with it. The same applies with growing market share.

Improving product quality will help improve total sales but it is not a financial objective.

The only financial objective that is precise and measurable is option D, which sets the goal of increasing earnings per share at least 15% every year.

5 0
3 years ago
If your answer is zero, enter "O". a. Under a 2017 divorce agreement, Joan is required to pay her ex-husband, Bill, $2,340 a mon
scoundrel [369]

Answer:

$2,400 in 2019 are deductible as alimony.

Step-by-step explanation:

Hillary get divorced in the year = 2016

She has to pay her ex-spouse $200 per month until her son reaches 18 years of age in 7 years.

His son will reach of the age of 18 = 2016 + 7 = 2023

She has to pay $200 till 2023 and $120 thereafter.

Her payments are deductible as alimony in 2019 would be = $200 × 12

                                                                                                 = $2,400

$2,400 in 2019 are deductible as alimony.

4 0
3 years ago
The business analyst for Video Sales, Inc. wants to forecast this year's demand for DVD decoders based on the following historic
Dmitriy789 [7]

Answer:

d) 420

Explanation:

In three-year weighted moving average with weights of 0.5, 0.3, and 0.2, the forecast can be calculated using the following formula

Forecast(This year) = 0.5*Demand(last year) + 0.3*Demand(2 years ago) + 0.2*Demand(3 years ago)

Forecast(This year) = 0.5*300 + 0.3*500 + 0.2*600

Forecast(This year) = 150 + 150 + 120

Forecast(This year) = 420

6 0
3 years ago
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