2 Problem 7-8 Dividend Discount Model (LO2)
60
points
Rework Table 24 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only
6% a year and that each investor requires the same 12% expected return. The company will pay a dividend of $5.40 at the end of the
first year. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Spoed
Horizon
(years)
1
PV
(Dividends)
PV (Terminal
Price)
Value per
Share
Boo
Punt
2
3
Deterences
10

When a company produces and sells x thousand units per week, its total weekly profit is p thousand dollars, where upper p equals startfraction 800 x over 100 plus x squared endfraction . the production level at t weeks from the present is x equals 4 plus 2 t. find the marginal profit, startfraction dp over dx endfraction and the time rate of change of profit, startfraction dp over dt endfraction . how fast (with respect of time) are profits changing when tequals8?

Data for hermann corporation are shown below: per unit percent of sales selling price $ 125 100 % variable expenses 80 64 contribution margin $ 45 36 % fixed expenses are $85,000 per month and the company is selling 2,700 units per month. required: 1-a. how much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,000 and monthly sales increase by $20,000? 1-b. should the advertising budget be increased?

Selected information about income statement accounts for the reed company is presented below (the company's fiscal year ends on december 31): 2018 2017sales $ 4,400,000 $ 3,500,000cost of goods sold 2,860,000 2,000,000administrative expenses 800,000 675,000selling expenses 360,000 312,000interest revenue 150,000 140,000interest expense 200,000 200,000loss on sale of assets of discontinued component 50,000 —on july 1, 2018, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by gaap. the assets of the component were sold on september 30, 2018, for $50,000 less than their book value. results of operations for the component (included in the above account balances) were as follows: 1/1/18-9/30/18 2017 sales $ 400,000 $ 500,000 cost of goods sold (290,000 ) (320,000 )administrative expenses (50,000 ) (40,000 )selling expenses (20,000 ) (30,000 )operating income before taxes $ 40,000 $ 110,000 in addition to the account balances above, several events occurred during 2018 that have not yet been reflected in the above accounts: a fire caused $50,000 in uninsured damages to the main office building. the fire was considered to be an infrequent but not unusual event.inventory that had cost $40,000 had become obsolete because a competitor introduced a better product. the inventory was sold as scrap for $5,000.income taxes have not yet been recorded.required: prepare a multiple-step income statement for the reed company for 2018, showing 2017 information in comparative format, including income taxes computed at 40% and eps disclosures assuming 300,000 shares of common stock. (amounts to be deducted should be indicated with a minus sign. round eps answers to 2 decimal places.)