A firm\'s new president wants to strengthen the company\'s make it financially s
ID: 2809093 • Letter: A
Question
A firm's new president wants to strengthen the company's make it financially stronger? a. Increase inventories while holding sales and const of goods b. Increase accounts receivable while holding sales c. Increase EBIT while holding sales constant. Which of the tullowing ations wwds e. Increase notes payable while holding sales constant. accounts payable while holding sales constant 11·$35.50 per share is the current ' stock. The 5.50% per year. The required rate of return on the stock., is 900% today? t price for Foster Farms' stock. The dividend is projecied to increase at a contanf What is the stock's expected price 3 years from a. $37.86 b. $38.83 c. $39.83 d. $40.85 e. $41.69 12. Kellner Motor Co.'s stock has a required rate of return of 11.50%, and it sells for S2500 per is expected to grow at a constant rateof 7.00%, what was the last dividend. Do? share. Kellners divide a. $0.95 b. $1.05 c. $1.16 d. $1.27 e. $1.40 13. Hunter Manufacturing Inc.'s December 31, 2014 balance sheet showed total common equity of $2,050,000a 100,000 shares of stock outstanding. During 2015, Hunter had $250,000 of net income, and it paid out $100,000 dividends. What was the book value per share at 12/3 1/2015, assuming that Hunter neither issued nor retired an stock during 2015? a. $20.90 b. $22.00 c. $23.10 d. $24.26 e. $25.47 14 Merrell Enterprises' stock has an expected return of 14%. The stock's dividend is expected to grow 890, and it currently sells for $50 a share. Which of the following statements is CORRECT? a. The stock's dividend yield is 8%. b. The current dividend per share is $4.00. c. The stock price is expected to be $54 a share one year from now d. The stock price is expected to be $57 a share one year from now e. The stock's dividend yield is 7%.Explanation / Answer
Q 10 ) ........ option - C
Increase in EBIT, with sales being constant means that there is control or reduction in variable and fixed cost of the entity. Thus improvement in gross margin always helps financial strenthening of firm.
Q 11) ......... Option - E
35.5 * ( 1.055)3 = 41.69
Q 12 ) ...... Option - B
D0 ( 1 + g) / ( Ke - g) = 25
D0 (1.07) / ( 0.115 - 0.07) = 25
D0 (1.07) = 25 * 0.045 = 1.125
D0 = 1.125 / 1.07 = 1.05
Question - 13 .......... Option - B
Equity Beginning = 2,050,000 shall be added with retained earnings of 250000 - 100000 = 150000
Ending equity = 2050,000 + 150,000 = 2200,000
Book value per share = 2200,000 / 100,000 = 22
Question - 14 ......... Option - C
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