Answer:
a. ROE (r) = 13% = 0.13
EPS = $3.60
Expected dividend (D1) = 50% x $3.60 = $1.80
Plowback ratio (b) = 50% = 0.50
Cost of equity (ke) = 12% = 0.12
Growth rate = r x b
Growth rate = 0.13 x 0.50 = 0.065
Po= D1/Ke-g
Po = $1.80/0.12-0.065
Po = $1.80/0.055
Po = $32.73
P/E ratio = <u>Current market price per share</u>
Earnings per share
P/E ratio = <u>$32.73</u>
$3.60
P/E ratio = 9.09
b. ER(S) = Rf + β(Rm - Rf)
ER(S) = 5 + 1.2(13 - 5)
ER(S) = 5 + 9.6
ER(S) = 14.6%
Explanation:
In the first part of the question, there is need to calculate the expected dividend, which is dividend pay-our ratio of 50% multiplied by earnings per share. We also need to calculate the growth rate, which is plowback ratio multiplied by ROE. Then, we will calculate the current market price, which equals expected dividend divided by the difference between return on stock (Ke) and growth rate. Finally, the price-earnings ratio is calculated as current market price per share divided by earnings per share.
In the second part of the question, Cost of equity (return on stock) is a function of risk-free rate plus beta multiplied by market risk-premium. Market risk premium is market return minus risk-free rate.
The answer that would best complete the given statement above would be option B. HOME NETWORK. A home network allows you to create a wireless connection among your smart devices. This is also known as HAN and this <span>facilitates communication among devices within the close vicinity of a </span>home<span>. Hope this helps.</span>
Answer:B
Explanation:
This is because as one's income increases his aggregate demand also increases as they both have direct relationship with each other.
This is an opinion question; therefore there is no right or wrong answer.
You might want to consider talking about:
1. benefits
2. discrimination
3. support
4. employee engagement
Answer:
<u>3. divided by contribution margin per unit. (sales target net income</u><u>)</u>
<u>Explanation</u>:
In calculating the sales level in units needed to achive a certain net target income, this formula is applied:
Fixed cost + Targeted Income/Contribution margin per unit
<u>Fixed cost:</u> are all the cost that remains constant or unchanged for a longer period of time such as cost of rent, interest payments etc.
<u>Contribution margin per unit: </u>this refers to the difference between the selling price per unit and the variable cost per unit. This portion of the sales revenue covers (contributes to) the fixed costs.