In 2006 and 2007, kenneth cole productions (kcp) paid annual dividends of $0.72. in 2008, kcp paid an annual dividend of $0.36, and then paid no further dividends through 2012. kcp was acquired at the end of 2012 for $15.25 per share.

a) what would an investor with perfect foresight of the above been willing to pay for kcp at the start of 2006? (note: because an investor with perfect foresight bears no risk, use a risk-free equity cost of capital of 5%.)
b) does your answer to (a) imply that the market for kcp stock was inefficient in 2006?

San ruiz interiors provides design services to residential and commercial clients. the residential services produce a contribution margin of $450,000 and have traceable fixed operating costs of $480,000. management is studying whether to drop the residential operation. if closed, the fixed operating costs will fall by $370,000 and san ruiz’ income will

Afirm’s production function is represented by q(m,r) = 4m 3/4r1/3, where q denotes output, m raw materials, and r robots. the firm is currently using 6 units of raw materials and 12 robots. according to the mrts, in order to maintain its output level the firm would need to give up 2 robots if it adds 9 units of raw materials. (a) true (b) false

On january 2, well co. purchased 10% of rea, inc.’s outstanding common shares for $400,000, which equaled the carrying amount and the fair value of the interest purchased in rea’s net assets. well did not elect the fair value option. because well is the largest single shareholder in rea, and well’s officers are a majority on rea’s board of directors, well exercises significant influence over rea. rea reported net income of $500,000 for the year and paid dividends of $150,000. in its december 31 balance sheet, what amount should well report as investment in rea?