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DerKrebs [107]
3 years ago
8

Barton Industries expects next year's annual dividend, D1, to be $2.00 and it expects dividends to grow at a constant rate g = 4

.2%. The firm's current common stock price, P0, is $20.00. If it needs to issue new common stock, the firm will encounter a 4.5% flotation cost, F. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places.
Business
1 answer:
Gekata [30.6K]3 years ago
6 0

Answer: See explanation

Explanation:

The flotation cost adjustment that must be added to its cost of retained earnings will be calculated thus:

= Expected dividend / [Current price × (1 - Floatation cost)] + Expected growth rate

= 2.00/[20.00 × (1 - 4.5%)] + 4.2%

= 2.00 /[20.00 × (1 - 0.045)] + 0.042

= 2.00 / (20.00 × 0.955) + 0.042

= (2.00/19.10) + 0.042

= 0.104712 + 0.042

= 0.146712

New cost of equity = 14.67%

You didn't give the cost of equity calculated without the flotation adjustment. Let's assume that this is maybe 11%, the floatation on adjustment factor = 14.67% - 11% = 3.67%

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Answer:

Keystone XL would be bad for wildlife, especially endangered species. Also without Keystone XL, the same amount of bitumen will be produced and the U.S. will still get all of it through the other pipeline projects. Keystone is not needed!

Explanation:

3 0
3 years ago
Jackson Tires reported net sales of $80 million and total operating costs (including depreciation) of $52 million. Jackson Tires
Roman55 [17]

Answer:

d. 8.18 million

MVA is $380 million

Explanation:

Net residual Income is the value of the firm. All the preferred and required / agreed return on any the funding availed is deducted from the net earning after profit to make the value for the firm. The income purely associated to the firm is considered as the value of the firm.

Earning Before Interest and tax = Net Sales - Operating costs = $80 million - $52 million = $28 million

Net Operating profit after tax = $28 x ( 1 - 40% ) = $16.8 million

Return on investor-supplied capital = $115 million x 7.5% = $8.625 million

Value created for the firm = Net operating profit after tax - Return on investor-supplied capital = $16.8 - $8.625 = $8.175 million = $8.18 million

MVA is the net of market capitalization and stockholders equity of the firm. It is the difference of market value and book value of equity of a firm.

MVA = ( Outstanding shares x Market value of shares ) - Book value od the equity = ( 20 million shares x $25 per share ) - $120 million = $500 million - $120 million = $380 million

6 0
3 years ago
Which type of market is the one in which a person buys their favorite breakfast sandwich at a fast-food drive thru? product mark
pogonyaev

The type of market is the one in which a person buys stock in type fast food company is Financial market.

What is Financial market?

Any location or system that gives buyers and sellers thew ability to trade financial assets such as bonds, shares, the various international currencies, and derivatives , is referred to as a financial market.

Why is financial market important?

  • Markets provide finance for companies so they can hire, invest and grow.
  • They provide money for the government to help it pay for new roads, schools and hospitals.
  • They can help lower the costs you face buying food at the super market, taking out a mortgage or saving for your retirement.

Learn more about financial market here:

brainly.com/question/19733618

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4 0
1 year ago
On October 1, 2015, Zircon Jewelry Company accepted a 4-month, 10% note for $2,400 in settlement of an overdue account receivabl
Whitepunk [10]

Answer:

Explanation:

The journal entry is shown below:

Cash A/c Dr $2,480

         To Interest receivable $60

         To Interest revenue $20

         To Note receivable $2,400

(Being the collection of funds is recorded)

The computation of interest receivable is shown below:

= Principal × rate of interest × number of months ÷ (total number of months in a year)  

= $2,400 × 10% × (3 months ÷ 12 months)

= $60

And for interest revenue would be

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= $2,400 × 10% × (1 months ÷ 12 months)

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7 0
3 years ago
The owner of a flower shop has three employees. Two employees are better at arranging flowers in a vase while the third is skill
iVinArrow [24]

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Explanation:

4 0
2 years ago
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