Moss Company Has Provided the Following Data

question 63

Essay

Moss Company has provided the following data:
2016 revenues were $87,500.
2016 expenses were $43,900.
Dividends declared and paid by Moss during 2016 totaled $15,700.
Total assets on December 31, 2016 were $227,000.
Total stockholders' equity on December 31, 2016 was $133,000.
Common stock on December 31, 2016 was $93,000.
Required:
Calculate the beginning retained earnings balance.

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Definitions:

Dividend Growth Model

A valuation method that estimates the price of a company's stock based on the dividend growth rate and the expected dividend payments.

Estimated Dividend Growth Rate

The projected annual rate at which dividends paid by a company or fund are expected to grow.

Cost of Equity

The return a company is required to earn to convince investors to hold its shares, often estimated using models like the Capital Asset Pricing Model (CAPM).

Cost of Equity

The cost of equity is the return a company theoretically pays to its equity investors to compensate them for the risk of investing in the stock, often estimated using models like the Capital Asset Pricing Model (CAPM).