Price ceilings create five important effects: ______________

Grateful Eight Co. is expected to maintain a constant 4.6 percent growth rate in its dividends indefinitely. If the company has

ad-work [718]

Answer:

11%

Explanation:

To address this exercise, we need to recall the formula for dividend discounted model (DDM). The DDM is stated as below:

Stock intrinsic value = Next year dividend/(Required rate of return - Long term growth)

Rearrange a bit this formula, we have:

Next year dividend/Stock intrinsic value = Required rate of return - Long term growth, or

Dividend yield = Required rate of return - Long term growth

Putting all the number together, we have:

6.4% = Required rate of return - 4.6% or Required rate of return = 11%

7 0

3 years ago

The Sealing Company has 1,500 bonds outstanding that are selling for $1,060 each. The company also has 5,000 shares of preferred

iris [78.8K]

The weight of the common stock as it relates to the firm's weighted average cost of capital is <u>35%</u>.

<h3>What is the weighted average cost of capital?</h3>

The weighted average cost of capital computes a firm's cost of capital based on the firm's average cost of capital from all sources: common stock, preferred stock, bonds, and other forms of debt.

The weight of the common stock can be determined by dividing the common stock market value by the total capitalization from all sources.

<h3>Data and Calculations:</h3>

Outstanding:

Bonds payable = $1,590,000 (1,500 x $1,060)

Preferred stock = $160,000 (5,000 x $32)

Common stock = $936,000 (36,000 x $26)

Total debts and equity = $2,686,000

Weight of common stock = 35% ($936,000/$2,686,000 x 100)

Thus, the weight of the common stock as it relates to the firm's weighted average cost of capital is <u>35%</u>.

Learn more about the weighted average cost of capital at brainly.com/question/14703616

4 0

2 years ago

Swifty Corporation's allowance for uncollectible accounts was $187500 at the end of 2017 and $180500 at the end of 2016. For the

Nostrana [21]

Answer:

The amount Swifty debited to the appropriate account in 2017 to write off actual bad debts: $25,800

Explanation:

Allowance for uncollectible accounts at the end of 2017 = Allowance for uncollectible accounts at the end of 2016 + Bad debt expense of 2017 - The amount of write off actual bad debts.

The amount of write off actual bad debts = Allowance for uncollectible accounts at the end of 2016 + Bad debt expense of 2017 - Allowance for uncollectible accounts at the end of 2017 = $180,500 + $32,800 - $187,500 = $25,800

5 0

3 years ago

Harry owes the bank money. To repay his debt, he paid \$150$150dollar sign, 150 back to the bank each month. After 101010 months

Firdavs [7]

Answer: $8,400

Explanation:

Given the following:

Amount repaid each month = $150

Number of Periods for which amount was paid = 10 months

Amount left after 10 months payment = $6900

Harry's original debt=?

The total amount paid = $150 × 10 = $1500

Amount left = $6900

Total debt amount:

(Total Amount left + total amount paid )

$(6900 + 1500)

=$8400

7 0

3 years ago

One of the reasons that services marketing has lagged behind product marketing is because marketing first developed to move prod

nevsk [136]

The answer is false

4 0

3 years ago

Read 2 more answers

Price ceilings create five important effects: _______________