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Calculations for Stock and Product Prices

1. Problem-solving: (a) Calculate the expected future dividend per share of stock for each of the next five years for a firm that uses a 5% constant dividend growth policy and paid a dividend of \$2.50 last year. (b) Using your answers to part (a), calculate the total cost of this dividend policy for each of the next five years, assuming the firm has 50 million shares of common stock, and no preferred stock.

2. Problem-solving: Calculate the contribution margin per unit of output for a firm whose: (a) product price per unit (P) = \$10.00, and its average variable cost (AVC) = \$7.50. (b) P = \$15,000, and AVC = \$12,000.

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Anna, 108710

Question 1a
Dividend Y1 = 2.50*(1+5%) = \$2.625

Question 1b
Dividend Y1 ...

Solution Summary

The following posting helps with problems involving stocks and product prices. Concepts covered include common stocks, preferred stocks, and contribution margins. Step by step calculations are given for each problem.

\$2.19