Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.25 coming 3 years from today. The dividend should grow rapidly - at a rate of 21% per year - during Years 4 and 5, but after Year 5, growth should be a constant 8% per year. 1. If the required return on Computech is 18%, what is the value of the stock today?
Answers
Answer:
$10.98
Explanation:
Dividend per year;
D1 to D2 = 0
D3 = 1.25
D4 = 1.25 (1.21) = 1.5125
D5 = 1.5125 (1.21) = 1.8301
D6 = 1.8301 (1.08) =1.9765
Find Present values of each dividend at 18% required return;
PV( D1 to D2) = 0
PV( D3) = 1.25/1.18³ = 0.7608
PV( D4) = 1.5125 / (1.18^4) = 0.7801
PV( D5) = 1.8301 / (1.18^5) = 0.8000
PV( D6 onwards)
PV( D6 onwards) = 8.6393
Next, sum up the PVs;
= 0 + 0.7608 + 0.7801 + 0.8000 + 8.6393
= 10.98
Therefore, this stock is valued at $10.98
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Super Grocery store allocates its service department expenses to its various operating (sales) departments. The following data is available for its service departments: Expense Basis for allocation Amount Administrative Square feet of floor space $ 34,000 Advertising Amount of dollar sales $ 27,000 The following information is available for its three operating (sales) departments: Department Square Feet Dollar Sales Produce 1,470 $ 99,000 Bakery 980 $ 49,000 Meats 2,450 $ 61,000 Totals 4,900 $ 209,000 What is the total administrative expense allocated to the Meats department?
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Sanaa recently made partner at her law firm, and she is rewarding herself with the purchase of the new car. she told a coworker, "the volvo has nine airbags but the cadillac drives so smoothly." sanaa is currently in which stage of the purchase decision process?
Answers
Answer:
a. Physical appearance
Explanation:
The Physical appearance of a person is as a result of the genetic make up of the individual. This factor barely has an influence on an individual’s core belief system.
Religious background is a key element of individual’s core belief system as it forms the basis of one's belief about God, life, fate and destiny.
Family upbringing forms the basis of one's belief as the individual grows. The influence of the members of a family forms a part of the individual's core belief.
Life experiences as well forms a key part of our belief system and the same goes for personality.
Answers
Answer:
1. Accountants are ethically obligated to report financial information accurately
2. Reporting using the generally accepted accounting principles underscore on accuracy
3. Loss of confidence, lack of trust on the accounting team, a huge strain on their professional judgement and ethics.
Explanation:
1. Financial information in itself possesses some vital characteristics. One of these is the accuracy of the financial information. As the handler of financial activities, accountants are therefore saddled and ethically obligated to present and prepare their information accurately. This is so as to reflect the true picture of the going in the organization.
2. Reporting using GAAP - Generally Accepted Accounting Principles, seeks to converge the presentation of financial reports and statements on the basis of accuracy. Thus, reliability and relevance are ultimately the foremost objectives of these principles. I therefore have no doubt its usage conveys accuracy of reports.
3. Loss of confidence - financial reports through which the external analyst worked upon are often prepared by the internal staffs. The implication of a wrong and misleading reports from the company is an erosion of confidence on the credibility, reliability and competence of company's preparers of reports.
Lack of trust - The point above ultimately impacts on the level of trust placed on the accuracy, reliability and relevance of financial reports.
Professional Judgement and Ethics - The conducts of the company in presenting a wrong report throws the analyst into an ethnical dilemma, and a huge professional strain. This is not in line with best practices.
Answers
Answer:
A) Your own Contribution in 401(K) is $12,000.
B) Total Value of fund after one year = $21,000 × (1 + 12%)
= $23,520.
Explanation:
A) Total Annual Income = $120,000
Contribution in 401(K) = 10% of income
= $120,000 × 10%
= $12,000
your own Contribution in 401(K) is $12,000.
Employee contribution after tax = $12,000 × (1 31%)
= $8,280
Contribution of employer = $12,000 × 75%
= $9,000
Total Contribution = $12,000 + $9,000
= $21,000
Total Contribution in one year is $12,000.
Yield on fund = 12%
Total Value of fund after one year = $21,000 × (1 + 12%)
= $23,520.
after tax return = ($23,520 -$8,280) / $8,280
= 184%
After tax return is 184%.
You don't have to pay that income tax until you withdraw the money
Final answer:
The annual investment in the 401(k) plan is $21,525, comprising $12,300 from your contribution and $9,225 from your company's match. The one-year return, counting an expected yield of 12%, would be $24,108.
Explanation:
The annual investment in the 401(k) plan is calculated by finding 10% of the annual income of $123,000 which amounts to $12,300. The company then matches 75% of this investment. So, the company contribution is 0.75 * $12,300 = $9,225. Therefore, the total annual investment into the 401(k) plan is $12,300 (your contribution) + $9,225 (company’s contribution) = $21,525.
Your one-year return would be the total investment in the fund, including the expected 12% yield next year. So that's $21,525 * 1.12 = $24,108.
Learn more about contribution here:
#SPJ12
Answers
Answer:
Dr Bonds payable $90,300,000
Dr loss on early redemption of bonds $5,106,000
Cr Discounts on bonds payable $3,300,000
Cr Cash $92,106,000
Explanation:
The amount of cash paid to bondholders by calling the bonds is the 102% of the face value of $90.3 million i.e $90.3*102%=$92,106,000
The proceeds would debited to cash while the face value of the bond of $90.3 million would be debited to bonds payable account.
In addition the remaining discount of $3.3 million would credited to discounts on bonds payable account.
The loss or gain on the bond call can then be determined as appropriate.
Answers
If Garden Variety Flower Shop uses 750 clay pots a month. The pots are purchased at $2 each. Annual carrying costs per pot are estimated to be 30 percent of cost, and ordering costs are $20 per order. The manager has been using an order size of 1,500 flower pots:
- a. What additional annual cost is the shop incurring by staying with this order size will be: $105.24
- b. What benefit would using the optimal order quantity yield will be 51.63%
a. Additional annual cost
Annual demand (D) =$750 x 12= $9,000
Ordering cost=$20 per order
Annual carrying costs(H)=0.30 ×$2.00 = $0.60
Order Quantity(Q) = 1,500
Find TC for Q
TC=Q÷2×H + D÷Q × S
TC=1,500÷2 × $0.60 + $9,000÷1,500×$20
TC=$450+$120
TC=$570............. (1)
Now find Qo
Qo=√2DS÷H
Qo=√2×$9,000×$20÷0.60
Qo=√600,000
Qo=$774.596
Qo=$774.60 (Approximately)
Find TC for Qo
TC=Q÷2×H + D÷Q ×
TC=774.60÷2 × $0.60 + $9,000÷774.60×$20
TC=$232.38+$232.38
TC=$464.76................(2)
Now let determine the additional annual cost
Additional annual cost=$570-$464.56
Additional annual cost=$105.24
b. Benefit would using the optimal order quantity yield (relative to the order size of 1,500)
Benefit=Qo÷Q
Benefit=$774.60÷1,500×100
Benefit=51.63%
The benefit is that about 51.63% of the storage space would be needed.
Learn more here:
Answer:
Additional cost= $570
Explanation:
Monthly demand = 750
Annual demand (D) = Monthly Demand x Number of months in a year
Annual demand (D) = 750 x 12 = 9,000
Cost (C) = $2.00 each
Annual carrying costs (Cc) = 30 percent of cost
Annual carrying costs (Cc) = 30% of $2.00 = $0.60
Ordering costs (Co) = $20
Current order quantity (Q1) = 1,500
Solution:
(a) Current cost is calculated as,
Current cost = Annual carrying costs + Annual ordering costs
Current cost = [(Quantity / 2) x Carrying cost] + [(Annual demand / Current Quantity) x Ordering cost]
Current cost = [(1500 / 2) x $0.60] + [(9000 / 1500) x $20]
Current cost = $450 + $120
Current cost = $570
Answers
Answer:
Required 1.
Jan 1
Cash $30,000 (debit)
Capital $30,000 (credit)
Jan 2
Rent Expense $2,450 (debit)
Cash $2,450 (credit)
Jan 3
Supplies $2,200 (debit)
Accounts Payable $2,200 (credit)
Jan 4
Accounts Payable $850 (debit)
Cash $850 (credit)
Jan 5
Cash $14,940 (debit)
Fees Earned $14,940 (credit)
Jan 6
Automobile Expenses $1,580 (debit)
Miscellaneous expenses $470 (debit)
Cash $2,050 (credit)
Jan 7
Salaries Expenses $2,000 (debit)
Cash $2,000 (debit)
Jan 8
Supplies Expense $1,100 (debit)
Supplies $1,100 (credit)
Jan 9
Capital $3,200 (debit)
Cash $3,200 (credit)
Required 2
Cash = $ 34,390 (debit)
Capital = $ 26,800 (credit)
Rent Expense $2,450 (debit)
Supplies = $ 1,100 (debit)
Accounts Payable = $ 1,350 (credit)
Fees Earned $14,940 (credit)
Automobile Expenses $1,580 (debit)
Miscellaneous expenses $470 (debit)
Salaries Expenses $2,000
Supplies Expense $1,100
Required 3.
Debit Credit
Cash $ 34,390
Capital $ 26,800
Rent Expense $2,450
Supplies $ 1,100
Accounts Payable $ 1,350
Fees Earned $14,940
Automobile Expenses $1,580
Miscellaneous expenses $470
Salaries Expenses $2,000
Supplies Expense $1,100
Totals $43,100 $43,100
Required 4.
a. Amount of total revenue recorded in the ledger = $14,940
b. Amount of total expenses recorded in the ledger = $7,600
c. Amount of net income for January = $7,340
Required 5.
Increased by $4,140
Explanation:
Calculation of T - Account Balances
Cash $30,000 - $2,450 - $850 + $14,940 - $2,050 - $2,000 - $3,200 = $ 34,390 (debit)
Capital $30,000 - $3,200 = $ 26,800 (credit)
Rent Expense $2,450 (debit)
Supplies $2,200 - $1,100 = $ 1,100 (debit)
Accounts Payable $2,200 - $850 = $ 1,350 (credit)
Fees Earned $14,940 (credit)
Automobile Expenses $1,580 (debit)
Miscellaneous expenses $470 (debit)
Salaries Expenses $2,000
Supplies Expense $1,100
Calculation of total expenses recorded in the ledger.
Rent Expense $2,450
Automobile Expenses $1,580
Miscellaneous expenses $470
Salaries Expenses $2,000
Supplies Expense $1,100
Total $7,600
Calculation of net income for January.
Sales Revenue $14,940
Less Expenses ( $7,600)
Net Income / (Loss) $7,340
Calculation of increase or decrease in owner’s equity for January.
Net Income / (Loss) $7,340
Less Drawings ($3,200)
Change $4,140
Therefore, Owners Equity Increased by $4,140