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pychu [463]
3 years ago
11

JCPenney Company is expected to pay a dividend in year 1 of $1.65, a dividend in year 2 of $1.97, and a dividend in year 3 of $2

.54. After year 3, dividends are expected to grow at the rate of 8% per year. An appropriate required return for the stock is 11%. The stock should be worth _______ today.
a. $33.00.
b. $40.67.
c. $71.80.
d. $60.00.
e. none of these is correct.
Business
1 answer:
arlik [135]3 years ago
7 0

Answer:

c = $71.80.

Explanation:

So, from the question above, it is given that the dividend in the first year = $1.65, the dividend in the second year = $2.54, the dividend for the third year  grows at the rate of 8% and the appropriate required return for the stock = 11%.

The first thing to do here is to determine the terminal value. The terminal value can be calculated as below as;

Terminal value = [ 2.54 × ( 1 + 8/100) ÷ (11/100 - 8/100) ]  = 91.44

The value of the stock today can be calculate as be as:

The value of the stock today = 1.65 / (1 + 11/100 )¹ + 1.97 /  (1 + 11/100)² + 2.54 / (1 + 11/100)³ + 91.44 /  (1 + 11%)³ = $71.80.

Therefore,  stock should be worth $71.80 today.

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natta225 [31]
To solve for the cross-price elasticity of demand:
Take the quantity of the diamonds demanded and divide it by the decrease in the price of sapphires. 
Cross-price elasticity of demand = 15/25
Cross-price elasticity of demand = 0.6

When you are solving for the cross-price elasticity of demand, you are seeing the response to the demand of a item when price changes for another good. 
4 0
3 years ago
Fidelity Stereo Company has provided the following information regarding its activity-based costing system:Purchasing department
VikaD [51]

Answer:

a. $392, 265

Explanation:

Given that:

i. Purchasing department, overhead allocation rate is $77 per purchase order.

ii. Assembly department, overhead allocation rate is $5 per part.

iii. Packaging department, overhead allocation rate is $4 per unit.

iv. Direct material cost is $70 per unit.

v. Each stereo has 50 parts.

Total parts required = 1200 x 50

                                 = 60000

vi. 45 purchase order was required for 1200 stereos.

Thus:

i. $77 x 45 = $3465

ii. $5 x 60000 = $300000

iii. $4 x 1200 = $4800

iv. $70 x 1200 = $84000

Therefore,

total cost for 1200 stereos = $3465 + $300000 + $4800 + $84000

                                            = $392, 265

8 0
3 years ago
A theory of strategic factor markets suggests that the resources a firm possesses might give it an advantage versus competitors
dybincka [34]

Explanation:

Organizations are integrated systems that use resources to achieve certain objectives and goals and become profitable and competitive.

Globalization was a phenomenon that contributed to an increase in the flow of information and changes in technologies and paradigms that contributed to a greater speed in consumer trends, and in the number of companies competing in the market.

Therefore, to achieve competitive advantage, it is not enough for the organization to use its resources in a conventional way, it is necessary to use strategies to add value to its processes. Considering the current business scenario, it can be said that the human resource in companies is the one that will give it a sustainable competitive advantage, since the knowledge acquired is one of the main resources used for the company to position itself in relation to competitors, each time more companies are promoters of social responsibility, so prioritizing knowledge and its stakeholders will always be the most advantageous option for creating value and competitive advantages.

4 0
2 years ago
Heather Hudson makes stuffed teddy bears. Recent information for her business follows: Selling price per bear $ 32.50 Total fixe
Neporo4naja [7]

Answer: 26.5% increase

Explanation:

Current profit = Sales - Variable costs - fixed costs

= ((32.50 - 16.50) * 360 bears) - 1,420

= $4,340

Sales increase by 20% = 360 * ( 1 + 20%) = 432 bears

New profit;

= ((32.50 - 16.50) * 432 bears) - 1,420

= $5,492

Effect of sales increase = ( 5,492 - 4,340) / 4,340

= 26.5% increase

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