Tresnan Brothers is expected to pay a $1.60 per share dividend at the end of the year (i.e., D1 = $1.60). The dividend is expected to grow at a constant rate of 3% a year. The required rate of return on the stock, rs, is 5%. What is the stock's current value per share? Round your answer to the nearest cent.

Answers

Answer 1

Answer:

Answer:

The price of the stock today is $80.00

Explanation:

The price of a stock whose dividends are expected to grow at a constant rate is calculated by the constant growth model of the DDM. The price of a stock under DDM is based on the present value of the expected future dividends that the stock will pay. The formula for price under this model is,

P0 = D1 / r - g

Where,

D1 is the dividend expected for the next period
r is the required rate of return
g is the growth rate in dividends

P0 = 1.6 / (0.05 - 0.03)

P0 = $80.00

Related Questions

James, Inc., has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of 5 years. The depreciation schedule for the machine is straight-line with no salvage value. The machine costs $540,000. The sales price per pair of shoes is $77, while the variable cost is $29. Fixed costs of $245,000 per year are attributed to the machine. The corporate tax rate is 22 percent and the appropriate discount rate is 9 percent. What is the financial break-even point? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16)
What is true with respect to the demand of a monopolist?
Vilas Company is considering a capital investment of $183,600 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $10,557 and $51,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment.Required:a. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.)b. Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 10.52%)c. Using the discounted cash flow technique, compute the net present value.
The owner of Showtime Movie Theaters, Inc., would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks follow. The owner then used multiple regression analysis to predict gross revenue (y), in thousands of dollars, as a function of television advertising (x1), in thousands of dollars, and newspaper advertising (x2), in thousands of dollars. The estimated regression equation was ŷ = 83.2 + 2.29x1 + 1.30x2. (a) What is the gross revenue (in dollars) expected for a week when $4,000 is spent on television advertising (x1 = 4) and $1,500 is spent on newspaper advertising (x2 = 1.5)? (Round your answer to the nearest dollar.)
you recently increased you're spending on marketing by 10%. you now spend 5500 per month. revenue increase by 1000 per month and you're gross margin percentage is 70%. All other expenses stayed consant. Did the increase pay off?

What is the effect of contractionary fiscal policy in the short run?

Answers

Answer:

D. It will decrease the output level

Explanation:

Answer: d

Explanation:

Which of the following management actions is permissible during a union certification election? Promising benefits to employees if they reject the union Requiring all employees to attend "captive audience" speeches in the company auditorium regarding the union organizing effort Requiring small groups of employees to meet with management in a supervisor’s conference room to discuss the organizing effort Asking employees in advance of the election how they feel about the union

Answers

Answer:

Requiring all employees to attend “captive audience” speeches in the company auditorium regarding the union organizing effort

Explanation:

In simple words, union certification election refers to the electoral process under which the labor force of an organisation chooses its leader for a fixed period of time as determined by the rules. This process is usually seen in large organisations where a thousands of labor workforce is included.

Just like any other process, in these elections also the candidates are supposed to present themselves against the voters and tell them their ideas and the works they are going to perform.

Cramer Corp. issued $20,000,000 of 5-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $19,227,757. Interest on the bonds is payable semiannually. Required: Journalize the entry to record the first semiannual interest payment, and the amortization of the bond discount, using the interest method? Round your answers to the nearest dollar amount. Refer to the Chart of Accounts for exact wording of account titles.

Answers

Answer:

The journal entry is as follows:

Interest expense $961,388.00

Discount on issue of bond $61,388.00

Cash $900,000.00

Explanation:

In order to prepare the journal entry we have to calculate first the interest expense and the cash.

Therefore, Interest expense= ($19,227,757×10%×6/12)=$961,388.00

Cash=$20,000,000×9%×6/12= $900,000

By difference then, the discount on bond payable=$961,388-$900,000

=$61,388.

Hence, the journal entry is as follows:

Interest expense $961,388.00

Discount on issue of bond $61,388.00

Cash $900,000.00

Landis received $90,000 cash and a capital asset (basis of $50,000, fair market value of $60,000) in a proportionate liquidating distribution. His basis in his partnership interest was $120,000 prior to the distribution. How much gain or loss does Landis recognize, and what is his basis in the asset received?a. $0 gain or loss; $30,000 basis.b. $0 gain or loss; $50,000 basis.
c. $0 gain or loss; $60,000 basis.
d. $20,000 gain; $50,000 basis.
e. $30,000 gain; $60,000 basis.

Answers

Answer:

a. $0 gain or loss; $30,000 basis.

Explanation:

Since the partnership is being liquidated, Landis doesn't have to recognize any gain or loss resulting from the liquidation because the cash amount that he is receiving is less than his partnership interest. The asset's basis = $120,000 - $90,000 (cash) = $30,000, regardless of its current market value or prior basis.

What are some forces that influence environmental uncertainty? Which typically has the greatest impact on uncertainty? --- environmental complexity or environmental dynamism? Why?

Answers

Answer:

Environmental uncertainty is the degree to which and organization lacks factual or competent information concerning the internal and external factors affecting the operating environment of an organization.

Explanation:

Environmental complexity has the most impact on uncertainty because in a complex environment many external factors interact with the organization for example an automobile manufacturer requires highly skilled labour and they also have to deal with government regulations as they change. The maximum uncertainty occurs when there is a complex organization and an unstable environment.

Final answer:

Environmental uncertainty is influenced by forces such as technology, regulations, and competition. Both environmental complexity and dynamism can impact uncertainty, with complexity arising from various external factors while dynamism from the rate of change. The extent of impact depends on the specific context.

Explanation:

Environmental uncertainty refers to the lack of knowledge or predictability about the future state of the environment in which a business operates. There are several forces that can influence environmental uncertainty, such as technological advancements, government regulations, economic conditions, and competitive dynamics.

Environmental complexity refers to the number and diversity of external factors that affect a business. It includes factors like the number of competitors, customers, suppliers, and other stakeholders. Environmental dynamism, on the other hand, refers to the rate of change and unpredictability in the external environment.

Both environmental complexity and environmental dynamism can contribute to uncertainty, but the impact varies depending on the specific context. In some cases, environmental complexity may have a greater impact on uncertainty, as the presence of numerous factors and stakeholders can make it difficult to assess and predict outcomes. In other cases, environmental dynamism may be the primary driver of uncertainty as rapid changes in the external environment can make it challenging to anticipate and respond to new developments.

Learn more about Environmental uncertainty here:

brainly.com/question/33726502

#SPJ3

True Fit Shoe Company makes loafers. During the most recent year. True Fit incurred total manufacturing costs of $24.500.000. Of this amount. $3,000,000 was direct materials used and $16, 800,000 was direct labor. Beginning balances for the year were Raw Materials Inventory. $900,000. Work-in-Process Inventory. $600,000; and Finished Goods Inventory. $1, 300,000. At the end of the year, balances were Raw Materials inventory. $800,000; Work-in-Process Inventory. $1, 700,000; and Finished Goods inventory. $390,000.Requirements

Analyze the inventory accounts to determine:

1. Cost of raw materials purchased during the year.
2. Cost of goods manufactured for the year.
3. Cost of goods sold for the year.
4. Cost of raw materials purchased during the year.

Answers

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

True Fit incurred total manufacturing costs of $24.500.000. Of this amount. $3,000,000 was direct materials used and $16, 800,000 was direct labor. Beginning balances for the year were Raw Materials Inventory. $900,000. Work-in-Process Inventory. $600,000; and Finished Goods Inventory. $1, 300,000. At the end of the year, balances were Raw Materials inventory. $800,000; Work-in-Process Inventory. $1, 700,000; and Finished Goods inventory. $390,000.

1) Raw material used= beginning inventory + purchases - ending inventory

3,000,000= 900,000 + purchases - 800,000

2,900,000= purchases

2) cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

cost of goods manufactured= 600,000 + 24,500,000 - 1,700,000= $23,400,000

3) COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 1,300,000 + 23,400,000 - 390,000= $24,310,000

Other Questions

Maintenance money for an athletic complex has been sought. Mr. Kendall, the Athletic Director, would like to solicit a donation to cover all future expected maintenance costs for the building. These maintenance costs are expected to be $1 million each year for the first five years, $1.3 million each year for years 6 through 10, and $1.5 million each year after that. (The building has an indefinite service life.)If the money is placed in the account that will pay 5% interest compounded annually, how large should the gift be?

Suppose that Tucker Industries has annual sales of $6.60 million, cost of goods sold of $2.94 million, average inventories of $1,205,000, and average accounts receivable of $660,000. Assuming that all of Tucker's sales are on credit, what will be the firm's operating cycle? (Round your answer to 2 decimal places.)

Describe the main differences for revenue spending between ""for profit"" companies and ""not for profit"" companies. Describe how the main financial documents of Goodwill are similar to those companies that are ""for profit"". Describe how the main financial documents of Goodwill are difference to those companies that are ""for profit"".

A static budget: _________a. should be compared to actual costs to assess how well costs were controlled. b. should be compared to a flexible budget to assess how well costs were controlled. c. is valid for only one level of activity. represents the best way to set spending targets for managers. d. A planning budget is prepared before the period begins and is valid for only the planned level of activity.