Lincoln Thomas Believes That the Harris Group Will Pay a Dividend

question 109

Short Answer

Lincoln Thomas believes that the Harris Group will pay a dividend of $4 on its common stock in year 2.Thereafter, you expect dividends to grow at a rate of 12 percent a year in perpetuity.If Lincoln requires a return of 24 percent on his investment, how much should he be willing to pay for the stock?

Calculate and understand the significance of the contribution margin and contribution margin ratio.

Understand the effect of changes in sales volume on costs and profitability.

Determine the operating income under different sales and cost scenarios.

Analyze the impact of changes in fixed and variable costs on the break-even point.

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