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:
Explanation:
The journal entry on April 13 for receipt of payment from customer is as follows:
Date Account title and explanation Ref Debit Credit
13-April Cash ($5000 - $150) $4,850
Sales discount ($5000* 3%) $150
Accounts receivable
$5000
(To record the receipt of payment from customer net of discount
Answer:
The journal entry to record the sale is shown below:
Explanation:
The journal entry which is to be recorded for the sale is as follows:
On November 10,
Accounts Receivable A/c.................Dr $8,000
Sales A/c...............................................Cr $8,000
As the sale made by the Flores on November 10, therefore, the sales account is credited with the amount. And the sale is made against the Account receivable account which is debited because the payment is not made yet as there are conditions of the credit term which is to be followed. So, the account receivable is created.
Answer:
Licensing
Explanation
Licensing is a contractual agreement whereby one company (the licensor) allows another company to use its trademark for products and services offered by this company (licensee) for a royalty or fee and here royalty was received for the use of name.
