Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 01, 2024

A firm has net income equal to $200m in 2019 and $150m in 2018. Book equity at the end of 2019 is equal to $1000m.

A firm has net income equal to $200m in 2019 and $150m in 2018. Book equity at the end of 2019 is equal to $1000m. The dividend payout is 30% each year and the firm has a cost of equity of 10%. The Clean Surplus Relation holds.

Residual earnings in 2018 is:

A. $68.6m. B. $74.5m C. $70.2m D. $79.4m E. None of the above.

Could you pleases explain why the answer is B. Thank you.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

42. If Xi,i = 1,..., n are independent normal random variables, with Xi having mean i and variance 1, then the random variable n i=1 X2 i is said to be a noncentral chi-squared random variable. (a)...

Answered: 1 week ago

Question

★★★★★

Lizas predicts sales of $40,000 for May and $52,000 for June. Assume 60% of Lizas sales are for cash. The remaining 40% are credit sales; these customers pay in the month following the sale. Compute...

Answered: 1 week ago

Question

★★★★★

Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are smaller and less expensive than the home consoles. The company only recently began producing the home...

Answered: 1 week ago

Question

★★★★★

Struggling to understand Scientists are interested in monitoring the heatth of trout perch in the Oil Sands Region of Canada. As part of a larger study. sh were collected from the Athabasca River and...

Answered: 1 week ago

Question

★★★★★

7. In a large water tank experiment, water waves are gener- ated with straight, parallel wave fronts, 3.00 m apart. The wave fronts pass through two openings 5.00 m apart in a long board. The end of...

Answered: 1 week ago

Question

★★★★★

What makes Shenzhen Development Bank (SDB) an attractive target for investment, and what are the potential sources of value? What are the key risks for investing in SDB, and how can Newbridge...

Answered: 1 week ago

Question

★★★★★

40 kN R1-5: A circular plate of diameter 120 mm and thickness 10 mm is placed over a circular hole of diameter 60 mm in the ground. A circular shaft of diameter 50 mm sits on top of the plate and has...

Answered: 1 week ago

Question

★★★★★

If the tape timer creates dots at a rate of 28Hz, what time interval in seconds does 3 successive dotsrepresent?

Answered: 1 week ago

Question

★★★★★

Perceived environmental uncertainty is a function of environmental complexity and: receptivity productivity change contingency Question 8 14 points

Answered: 1 week ago

Previous Question Next Question