In 2020, your firm' s sales were $1,500,000, its net income was $400,000, and the dividend payment was $200,000. You believe that sales will increase by 7%, from 2020 to 2021. Assume that your firm uses the same dividend payout ratio in 2021. Using the percent-of- sale forecasting technique, how much is the firm expected to pay in dividends in 2021? O $214,026.75 O $200,014.75 O $200,015.75 $214,000.75
In 2020, your firm' s sales were $1,500,000, its net income was $400,000, and the dividend payment was $200,000. You believe that sales will increase by 7%, from 2020 to 2021. Assume that your firm uses the same dividend payout ratio in 2021. Using the percent-of- sale forecasting technique, how much is the firm expected to pay in dividends in 2021? O $214,026.75 O $200,014.75 O $200,015.75 $214,000.75
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:In 2020, your firm' s sales were $1,500,000, its net income was $400,000, and the dividend
payment was $200,000. You believe that sales will increase by 7%, from 2020 to 2021.
Assume that your firm uses the same dividend payout ratio in 2021. Using the percent-of-
sale forecasting technique, how much is the firm expected to pay in dividends in 2021?
O $214,026.75
O $200,014.75
O $200,015.75
$214,000.75
Transcribed Image Text:Security A pays $100 annually forever, starting at the end of this year. Security B pays $100
annually forever, starting at the end of this year, and grows at a rate (g) of 3% annually. If
the interest rate decreases from 10% to 6%, what will happen to the present value of these
two securities?
The present value of Security B will increase more than the present value of Security A
O The present value of Security B will decrease more than the present value of Security A
O The present value of Security A will decrease more than the present value of Security B
O We do not have enough information
O The present value of Security A will increase more than the present value of Security B
Question 10
You plan to invest the same amount of dollars in your retirement account for the next 40
years, starting at the end of this year. You think that you will need $1,345,989.12 in your
account at that point in time. How much should you invest every year, given that the
market offers an interest rate of 8% compounded annually?
O 5,195.74
O 5,343.12
O $4,137.64
O $6,121.22
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