# AC 45 - 35070 Queston How much are you willing to pay for...

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Question: Answer: Calculations March April May June A Sales 2530 2470 2310 B Add: Closing stock of Finished product 2010 2260 2130 2360 C = Closing of previous month Less: opening stock 2010 2260 2130 D = A + B - C Production 2780 2340 2670 E = D x 2 Raw material required 5560 4680 5340 F = Next month E x 0.50 Add: Closing stock of Raw material 2340 2670 G = Previous month opening inventory Less: opening stock 2340 H = E + F - G Raw material purchased 5010 I = H x \$7 Raw material purchased \$

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Unformatted text preview: 35070 Queston: How much are you willing to pay for one share of J.M. Smucker Co. stock if the company just paid a \$0.70 annual dividend, the dividends increase by 3.0 percent annually, and you require a 10 percent rate of return? Answer: Share price = D 1 / (R e- G) Where D 1 is the dividend for next year = \$0.70 x 1.03 = \$0.721 R e = 10% and G = 3% So, Share price = 0.721 / (0.10 - 0.03) = \$10.30....
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