Why is this so difficult

HCC, Inc., expects its dividends to grow at 25 percent per year for the next seven years before levelling off to a constant 3 pe

Minchanka [31]

Answer:

a. $43.21

Explanation:

Find dividend (D) per year;

D1 = D0(1+g)

D0= current dividend = 1.05

g= growth rate = 25% or 0.25 as a decimal

therefore;

D1 = 1.05(1.25) =1.3125

D2 = 1.3125 (1.25) = 1.6406

D3 = 1.6406(1.25) =2.0508

D4 = 2.0508 (1.25) = 2.5635

D5 = 2.5635(1.25) = 3.2044

D6 = 3.2044(1.25) =4.0055

D7 = 4.0055 (1.25) = 5.0069

Terminal dividend: D8 = 5.0069(1.03) = 5.1571

Next , find the present values of each dividend (at t=0) at 11% discount rate;

1.3125 / (1.11) = 1.1824

1.6406 / (1.11^2) = 1.3315

2.0508 / (1.11^3) = 1.4995

2.5635 / (1.11^4) = 1.6887

3.2044 / (1.11^5) = 1.9017

4.0055 / (1.11^6) = 2.1415

5.0069 / (1.11^7) = 2.4116

Price of growing perpetual at (t= 0) = $\frac{5.1571 /(0.11-0.03)}{(1.11)^{7} } = \frac{64.46375}{2.07616} = 31.0495$

Next, sum up all the Present values to get the current stock price;

=43.2064

Therefore, the current price = $43.21

5 0

3 years ago

What is the major difference between the unadjusted trial balance and the adjusted trial balance?

11Alexandr11 [23.1K]

Answer:

The correct answer is Option a. The adjusted trial balance includes the postings of the adjustments for the period in the balance of the accounts.

Explanation:

The trial balance is a summary of all the account balances for an organization, usually spooled at the end of the year. The possibility exist that transaction that occurred during the year are not captured, accurately or properly recorded in the books. When the company's financial statements are reviewed at the end of the year, adjustments may be made to the unadjusted trial balance to include transactions previously not recorded, accurately or properly captured in the books of accounts.

The inclusion of these adjustments results in the adjusted trial balance.

Hence Option a which states that the adjusted trial balance includes the postings of the adjustments for the period in the balance of the accounts is the right option.

5 0

3 years ago

Read 2 more answers

An example of a tying arrangement is______ a. a restaurant offering both Pepsi and Coca-Cola products. b. a car manufacturer ins

ikadub [295]

Answer:

The correct answer is letter "B": A car manufacturer installing expensive onboard GPS/navigation systems in all the cars it sells.

Explanation:

A tying agreement is the type of contractual arrangement where a seller offers other(s) product for the purchase of one good as a part of only one bundle. The secondary product might not be necessary but the seller offers it mainly to generate more profit. Tying arrangements are considered anti-competitive practices.

4 0

2 years ago

Business operations Essay

juin [17]

Answer:

The description of the given term "Business operations" is provided below.

Explanation:

Together with all measures essential to manage as well as generate money besides your firm, is considered as business operations.
Sometimes a component devoted to the industry would be included throughout the marketing strategies, enough so founding members comprehend or recognize the authoritarian leadership style, machinery, personnel, including procedures.

6 0

2 years ago

What is the largest equities market in the world?

Dovator [93]

Actually its one and only New york stock exchange (NYSE) for sure, with biggest market capital transaction in big trillions of dollars and is also one of the most traded exchange in the whole world, and hence its also one of the best and top financial market in the world.

5 0

3 years ago