Answer:
P0 = $41.6666666 rounded off to $41.67
Explanation:
The constant growth model of dividend discount model (DDM) can be used to calculate the price of the stock today. DDM calculates the price of a stock based on the present value of the expected future dividends from the stock. The formula for price today under constant growth DDM is,
P0 = D1 / (r - g)
Where,
D1 is the dividend expected in Year 1 or next year
g is the constant growth rate in dividends
r is the discount rate or required rate of return
We first need to calculate the required rate of return for this company based on the previous growth rate, dividend and current share price prior to announcement.
50 = 4 / (r - 0.04)
50 * (r - 0.04) = 4
50r - 2 = 4
50r = 4 + 2
r = 6 / 50
r = 0.12 or 12%
Now using the post announcement data, the new share price will be,
P0 = 2.5 / (0.12 - 0.06)
P0 = $41.6666666 rounded off to $41.67
Answer:
$144,000
Explanation:
The computation of accumulated depreciation is shown below:-
Total cost = Invoice cost + Freight + Installation
= $336,000 + $6,000 + $30,000
= $372,000
Depreciation as per SLM = (Total Cost - Salvage Value) ÷ Estimated useful life
= (372,000 - 12,000) ÷ 5
= $72,000
The amount of accumulated depreciation (after 2 years) = Depreciation as per SLM × Years
= 72,000 × 2
= $144,000
So, for computing the accumulated depreciation we simply applied the above formula.
A system of maintaining standards in manufactured products by testing a sample of the output against the specification.
<span>The company could consider diversifying when sales are beginning to slow and there is a way to leverage some of the business's core competencies in other areas that would be more competitive. In addition, this could allow the business to not worry about being "all-in" in a certain area, where that area's success or failure could lead to the entire business thriving or failing. By diversifying itself, the business can also lower production and sales costs or increase overall sales.</span>
