Boom and Fall (B&F) expects to grow its business in the first 3 years and then the business expects the growth to decline after. The company just paid its annual dividend of $1 per share and is planning to increase its annual dividend by 10% for the next 3 years, and then the dividend will decline at an annual rate of 4% forever.
What is the value of B&F stock in one year if the required return is 12%?
What would be the impact on B&F stock price if the business growth will not decline after 3 years, therefore management would maintain the same dividend as that of year 3? Explain.
In: Finance
Boom and Fall (B&F) expects to grow its business in the first 3 years and then the business expects the growth to decline after. The company just paid its annual dividend of $1 per share and is planning to increase its annual dividend by 10% for the next 3 years, and then the dividend will decline at an annual rate of 4% forever.
What is the value of B&F stock in one year if the required return is 12%? What would be the impact on B&F stock price if the business growth will not decline after 3 years, therefore management would maintain the same dividend as that of year 3? Explain.
In: Finance
Your company uses a standard costing system, which bases its quantitative standards on historical experience. You are fortunate to be surrounded by a team of knowledgeable personnel in operations. In your first week on the job, you are asked to do the following tasks.
Q) You believe that your company should not develop its quantitative standards on historical experience. Explain why and suggest an alternative.
Q) Choose one of your company’s products. Suggest one ideal standard, and one currently attainable standard. Ensure that you include price, usage and cost in each standard.
note: for question two take any company's product as an example.
In: Accounting
A stock's dividend in 1 year is expected to be $2.4. The dividend is expected to remain the same indefinitely. The stock's required return is 12%. The estimated value of the stock today is $________.
A stock will pay no dividends for the next 3 years. Four years from now, the stock is expected to pay its first dividend in the amount of $2.4. It is expected to pay a dividend of $3 exactly five years from now. The dividend is expected to grow at a rate of 7% per year forever after that point. The required return on the stock is 12%. The stock's estimated price per share exactly TWO years from now, P2 , should be $______.
In: Finance
Data for two machines is as shown below:
| Machine X | Machine Y | |
| Initial Cost | $125,000 | $195,000 |
| Life | 6 | 12 |
| Salvage | 12% | 12% |
| First year cost | $12,000 | $15,000 |
| Increase in cost per year | $1,000 | $1,000 |
| Rate (p.y.c.y.) | 5% | 5% |
Which of the following statements is TRUE if the price of Machine X is estimated to remain the same over the foreseeable future?
| A. |
The EUAC for both the machines is the same. |
|
| B. |
The EUAC of X is greater than that of Y by $3,600. |
|
| C. |
The EUAC of X is less than that of Y by $3,600. |
|
| D. |
The EUAC for the machines cannot be determined based on the information provided. |
In: Finance
On March 31, 2018, Brodie Corporation acquired bonds with a par value of $300,000 for $313,650. The bonds are due December 31, 2023, carry a 9% annual interest rate, pay interest on June 30 and December 31, and are being held to maturity. The accrued interest is included in the acquisition price of the bonds. Brodie uses straight-line amortization.
Required:
| 1. | Prepare journal entries for Brodie to record the purchase of the bonds and the first two interest receipts. |
| 2. | Next Level If Brodie failed to separately record the interest at acquisition, explain the errors that would occur in the company’s financial statements (no calculations are required). |
In: Accounting
The Morgan corporation has two different bonds currently outstanding. Bond M has a face value of $20,000 and matures in 15 years. The bond makes no payments for the first 5 years, then pays $600 every six months over the subsequent six years, and finally pays $1,000 every six months over the last four years. Bond N also has a face value of $20,000 and a maturity of 15 years, it makes no coupon payments over the life of the bond. If the required return on both of these bonds is 10 percent compounded annually, what is the current price of bond M? Of Bond N?
In: Finance
According to our text (HBR, 2011), “Rivalry among existing competitors takes many familiar forums, including price discounting, new product introductions, advertising campaigns, and service improvements. High rivalry limits the profitability of an industry. The degree to which rivalry drives down an industry’s profit potential depends, first, on the intensity with which companies compete and, second, on the basis of which they compete” (p. 56-57). For this discussion forum, describe the intensity and the basis of rivalry in the industry in which you currently work? If you are not currently working, select an industry in which you are familiar. Please choose the restaurant indusrty
In: Operations Management
Using the data in the table below, estimate the demand function for cod.
|
Price, dollars per pound |
Quantity, thousand pounds per day |
|
1.90 |
1.5 |
|
1.35 |
2.2 |
|
1.25 |
4.4 |
|
1.20 |
5.9 |
|
0.95 |
6.5 |
|
0.85 |
7.0 |
|
0.73 |
8.8 |
Using the Excel trendline option to estimate a linear demand function, the linear demand function is
Qequals=12.53 minus 6.25 p12.53−6.25p.
Suppose the quantity in the first row of the table were
22
instead of 1.5.
The linear demand function would now be
Qequals=nothingminus−nothingp.
(Enter your responses rounded to two decimal places.)
In: Finance
You recently opened up a third-party customer service business in which companies outsource their customer service needs to your service. You invested $350,000 of capital to get the project off the ground, and are trying to determine the price you will charge for the service. You are seeking a 20% return on your investment and project that each service opportunity will carry with it a $5,000 cost to set up the account. If you project that you will work with 150 clients in the first year, what would be your pricing level for this service, using a targeted return approach?
Group of answer choices
$4,750.99
$6,689.99
$5,158.64
$6,354.58
$5,466.67
In: Finance