Answer:
A) $1.82
Explanation:
The dividends discount model calculates stock value based on dividends distributed and the required return rate:
current dividend $0.20 per share
dividends for year 1 = $0.23 per share
dividends for year 2 = $0.2645 per share
dividends for year 3 = $0.3042 per share
dividends for year 4 = $0.35 per share
After year 4, we compute the growing perpetuity as follows: dividend / (return rate - growth rate) = $0.35 / (17.4% - 2.5%) = $0.35 / 14.9% = $2.35
Next, we find the present value of the cash flows:
PV = $0.23/1.174 + $0.2645/1.174² + $0.3042/1.174³ + $0.35/1.174⁴ + $2.35/1.174⁵ = $0.1959 + $0.1919 + $0.188 + $0.1842 + $1.0537 = $1.82
Answer:
$600 million
Explanation:
On January 1, 2020, the balance of common stock & APIC is derived as follows:
Common stock & APIC = Paid-In Capital + Capital raised from selling 50 million shares at $20 each - Treasury Stock
This gives:
Paid-In Capital = $500 million
Issuance of 50 million shares at $20 each amounts to:
Treasury Stock involves buying back 20 million shares priced at $45 each.
Inserting the numbers leads to:
Common stock & APIC = $500 million + $1000 million - (20 million shares × $45 each)
Therefore, Common stock & APIC = $1500 million - $900 million = $600 million
The calculation for free cash flow can be summarized as follows:
Revenue 12000000
Subtract: Expense (8000000)
Subtract: Depreciation (1500000)
Earnings Before Tax 2500000
Subtract Tax (750000)
Earnings after tax 1750000
Add Depreciation 1500000
Total Cash Earnings 3250000
Subtract: Change in Working Capital (500000)
Subtract: Asset Purchase (700000)
Free Cash Flow 2050000
Therefore, Free Cash Flow can be computed in this manner.
To adjust for Rent Receivable:
Sanborn Company has a tenant paying $3,100 monthly for renting space. The tenant has outstanding rent for November and December, which results in a total Rent Receivable on December 31 of (3100*2) = $6,200
Consequently, the adjusting entry on December 31 should be recorded as follows:
Rent Receivable Debit $6,200
Rent Revenue Credit $6,200
(Reflecting adjustment for rent receivable)
Answer:
c) Providing a discount for students and seniors.
Explanation:
Price discrimination occurs when a seller charges different prices for the same product to varying customers. It is typically employed to capitalize on consumer surplus.
When a chocolatier identifies a buyer group willing to pay less, they can focus on this demographic and provide them with a lower payment option.
In this scenario, offering discounts to students and seniors indicates that the chocolatier has recognized these groups as customers likely to purchase chocolates for less than $20.
