Barack Obama is the President of the US
Answer:
Risk-free rate (Rf) = 8%
Return on market portfolio (Rm) = 15%
Beta (β) = 1.2
Ke = Rf + β(Rm - Rf)
Ke = 8 + 1.2(15 - 8)
Ke = 8 + 1.2(7)
Ke = 8 + 8.4
Ke = 16.40%
Earnings per share (EPS) = $10
Current dividend paid (Do) = 40% x $10 = $4
Retention rate (b) = &6/$10 x 100 = 60% = 0.6
ROE (r) = 20% = 0.2
Growth rate (g) = b x r
= 0.6 x 0.2
= 0.12 = 12%
Current market price (Po)
= Do<u>(1 + g) </u>
Ke - g
= $4<u>(1 + 0.12)</u>
0.1640 - 0.12
= $4<u>(1.12)</u>
0.044
= $101.82
Explanation:
First and foremost, we need to calculate the cost of equity based on capital asset pricing model. Then, we will determine the growth rate, which is a function of retention rate (b) and return on equity(r).
Finally, we will calculate the current market price, which is dividend paid, subject to growth, divided by the excess of cost of equity over growth rate.
Answer:
<h2>A. Avoid extra payroll expenses.</h2>
Explanation:
i hope it helps :)
Answer:
Explanation:
Return on common stockholders' equity for 2015:
(Net income - preferred stock)/Equity
(63,000-5,400)/2,400,000 = 57,600/2,400,000 = 2.4%
Return on common stockholders' equity for 2015:
(99,000-5,400)/3,000,000 = 93,600/3,000,000 = 3.12%
From these calculations, it is clear that return has improved.
