Exhibit 12.4 Use the Information Below for the Following Problem(S)

question 87

Multiple Choice

Exhibit 12.4
Use the Information Below for the Following Problem(S)
Assume that the dividend payout ratio will be 45 percent when the rate on long term government bonds falls to 9 percent. Since investors are becoming more risk averse, the equity risk premium will rise to 7 percent and investors will require a 16 percent return. The return on equity will be 14 percent.
-Refer to Exhibit 12.4.To what price will the market rise if the earnings expectation is $10.00?

• A) $71.40
• B) $66.30
• C) $54.20
• D) $77.00
• E) $51.10

Grasp the concept of creativity and factors affecting creative problem solving.

Understand the principles behind psychological testing, including reliability, validity, and standardization.

Appreciate the influence of stereotype threat on performance and cognitive function.

Apply knowledge of cognitive biases and heuristics in understanding human behavior and decision making.

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Definitions:

Direct Materials Quantity Variance

The discrepancy between the true usage of direct materials in production processes and the forecasted standard usage, multiplied by the standard unit cost.

Total Direct Materials Cost Variance

The difference between the actual cost of direct materials used in production and the standard cost of those materials.

Fixed Overhead Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Volume Variance

A measure used in budgeting and accounting to show the difference between expected (budgeted) and actual sales volumes, affecting revenue or costs.