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Molodets [167]
2 years ago
12

Chelsea Fashions is expected to pay an annual dividend of $1.26 a share next year. The market price of the stock is $24.09 and t

he growth rate is 2.6 percent. What is the cost of equity
Business
1 answer:
tekilochka [14]2 years ago
6 0

Answer:

7.83%

Explanation:

This is calculated by using the Gordon growth model (GGM) formula as follows: P = d / (r - g) ……………………………………… (1)

Where;

P =  market price of the stock = $24.09

d = next year annual dividend = $1.26 r = cost of equity = ?

g = dividend growth rate = 2.6%, or 0.026

Substituting the values into equation and solve for r, we have:

24.09 = 1.26 / (r - 0.026)

24.09 (r - 0.026) = 1.26

24.09r - 0.62634 = 1.26

24.09r = 1.26 + 0.62634

24.09r = 1.88634

r = 1.88634 / 24.09

r = 0.0783038605230386, or 7.83038605230386%

Rounding to 2 decimal places. we have:

r = 7.83%

Therefore, the correct option is 7.83 percent.

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A good economic model is more likely to address a:
mars1129 [50]

Answer:

Option D is correct one.

<u>Positive statement because a good model can be tested with evidence.</u>

Explanation:

Positive statement:

It is essentially goal and reality based. Also, positive explanations are have to demonstrate or invalidated however can't right them. Positive financial aspects manages the realities and circumstances and logical results connections which incorporates portrayals, hypothesis advancement and hypothesis testing.  

Normative Statement:  

Normative explanations are abstract and the substance are esteem based. The announcements are fundamentally assessment based so they can't be tried. Regulating explanation incorporates the worth decisions with respect to that whether the economy must resemble or the suggestion of specific approach to get an ideal objective.  

Economic Model:  

Financial displaying alludes to an objective, outline layout to help systematise the investigator's view. A monetary model can't delineate reality precisely in light of the fact that it would be too hard to even think about understanding. A model is an improvement that permits the financial specialist to perceive what is genuinely significant. Since great financial model ought to anticipate circumstances and logical results relationship and it hast to be tried with checked truth, great monetary model more probable tended to positive proclamation.

8 0
2 years ago
Tim's Taxi Service sold one of its cabs for $9,000. The cab had an original cost of $23,000 with $16,000 in accumulated deprecia
natta225 [31]

Answer:

The recognized gain is $2000

Explanation:

The carrying value of the cab sold is the difference between the original cost of $23,000 and the accumulated depreciation of $16,000, hence, carrying value is $7000($23000-$16,000)

The cash proceeds from the disposal of then cab are $9000

Gain on disposal of cab=$9000-$7000

Gain on disposal of cab=$2000

6 0
2 years ago
Common forms of _________ communication include job instructions, official memos, policy statements, manuals, and company public
cestrela7 [59]
Downward communication.

All of these things come from management, management communicates down to employees.
5 0
3 years ago
Semitool Corp. has an expected excess return of 6% for next year. However, for every unexpected 1% change in the market, Semitoo
xxTIMURxx [149]

Answer:

8.8%

Explanation:

Given:

Excess return = 6% = 0.06

Return respond factor = 1.2

Expected higher percent = 1.5% = 0.015

Increase growth (stock price) = 1% = 0.01

Actual excess return = ?

Computation of actual excess return:

Actual excess return = Excess return + Increase growth (stock price) + [Expected higher percent × Return respond factor]

= 0.06 + 0.01 + [0.015 × 1.2]

= 0.07 + [0.018]

= 0.088

= 8.8%

6 0
2 years ago
An example of organizational antecedents is a. Scarcity of resources b. Role ambiguity c. Promotions d. Democratic decision maki
allsm [11]

Answer:

decision making

democratic

5 0
1 year ago
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