The Following Information Relates to Yutter Corporation -What Is the Value of Yutter's Stock at the End

question 24

Multiple Choice

The following information relates to Yutter Corporation:
$\begin{array}{lr}&\text { Year } 1\\\text { Net income-year ended } 12 / 31 & \$ 12,500 \\\text { Dividends } & 3,000 \\\text { Return on net operating assets } & 13 \% \\\text { Return on equity } & 15 \% \\\text { Cost of equity } & 12 \%\end{array}$
-What is the value of Yutter's stock at the end of Year 1 using the dividend discount model assuming that the dividend payout ratio remains constant and Yutter grows at its sustainable equity growth rate?

• A)$83,333
• B)$157,642
• C)$500,000
• D)$557,000

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Definitions:

Work in Process

Goods in various stages of completion throughout the factory, not yet ready for sale, comprising direct labor, material, and manufacturing overhead.

Overapplied Manufacturing Overhead

This occurs when the allocated manufacturing overhead costs are more than the actual overhead costs incurred.

Underapplied Manufacturing Overhead

This occurs when the allocated cost for manufacturing overhead is less than the actual overhead costs incurred, indicating a shortfall in cost coverage.

Work in Process

Inventory that includes goods that are in production but not yet complete.