number 14 can.you help please 12) The stocks for BMT & AWM have the following pr

Question

number 14 can.you help please

12) The stocks for BMT & AWM have the following probability distributions BMT 8% 14% 20% WM 14% 17% 22% Pr nom 50% Recession Average Boom 30% a) Compute the expected rate of return for BMT. b) Compute the expected rate of return for AWM. 13)Answer problem 9-16 (NOT part b) on pages 179 & 180 of the textbook. 14)Last year BMT Corporation earned $20 million, and paid $8 million in dividends. The mpany follows a constant payout ratio dividend policy. If the company wants to pay $10 million in dividends next year, how much must BMT earn? 5) AWM sells 291,600 units of product annually. The optimal safety stock is 500 units. Eac units costs AwM S3, carrying costs are 30%, and the cost of placing an order with the supp $20 a) Compute the EOQ. b) Compute the total inventory costs at the EOQ level.

Explanation / Answer

Q14

We need to first calculate dividend payout ratio= Dividend paid/ net income= 8/20= 40%

Now, we need to calculate earning to maintain same dividend ratio=Dividend required/ dividend payout ratio=10/40%= $ 25 million

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