1. The common stock of Textile Mills pays an annual dividend of $1.65 a share. T
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Question
1. The common stock of Textile Mills pays an annual dividend of $1.65 a share. The company has promised to maintain a constant dividend even though economic times are tough. How much are you willing to pay for one share of this stock if you want to earn a 12 percent annual return?
A) $13.75 B) $14.01 C) $14.56 D) $14.79 E) $15.23
2. A company is considering producing a product for a new market. The fixed costs required for manufacturing and delivering the product is $50,000. Labor and material costs are estimated to be approximately $25.00 per product. If the product is sold for $35.00 each, the firm's break-even volume would be:
A) 50,000 units B) 5,000 units C) 2,500 units D) 500 units
3. A company had sales of $920,000 and fixed costs were $160,000. What was the income from operations if the contribution margin ratio was 30 percent?
A) $116,000 B) $276,000 C) $484,000 D) $644,000
4. A manufacturer estimates its factory overhead costs to be $30,000 and machine hours to be 4,000 for the year. If the actual hours worked on production total 3,800 and the actual factory overhead costs are $28,000, what is the amount of the over- or underapplied factory overhead?
A) $500 overapplied
B) $500 underapplied
C) $2,000 overapplied
D) $2,000 underapplied
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up Statementshowing Computations Paticulars Amount Q1 A) $13.75 P0 = D1/(ke-g) Where P0 is the price Ke is the required return 12.00% g is the growth rate 0.00% D1 is dividend at end of year 1.65 P0 = 1.65/(12% - 0%) P0 = 1.65/(12%) P0 = 13.75 Q3 A) $116,000 Sales 920,000.00 Less Variable Expenses = 920000(1-.30) (644,000.00) Contribution Margin 276,000.00 Fixed cost (160,000.00) Net operating income 116,000.00
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