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Ivanshal [37]
1 year ago
5

Judy's Boutique just paid an annual dividend of $2.35 on its common stock. The firm increases its dividend by 3.15 percent annua

lly. What is the company's cost of equity if the current stock price is $38.44 per share
Business
1 answer:
miss Akunina [59]1 year ago
8 0

The company's cost of equity is 9.45%

Given that

Annual dividend paid, D0 = $2.35

Dividend growth rate, g = 3.15% = 0.0315

Current stock price per share = $38.44

Now,

Current price of share = D1 ÷ (r - g) -(1)

Here,

r is the required rate of return

D1 = dividend at year 1 =  D0 × (1 + g)

= $2.35 × (1 + 0.0315)

= $2.424045

Therefore, from (1) we get

$38.44 = $2.424045 ÷ (r - 0.022)

(r - 0.0315) = 0.063060

r = 0.063060 + 0.0315

r = 0.09456

r = 0.0945 × 100% = 9.45%

Learn more about cost of equity here

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Home Services common stock offers an expected total return of 14.56 percent. The last annual dividend was $2.27 a share. Dividen
prohojiy [21]

Answer:

Dividend yield=10.3%

Explanation:

Mv=Do(1+g)/(Ke-g)

MV=?

Do=2.27

g=2.1%

Ke=14.56%

Mv=2.27(1+2.1%)/(14.56%-2.1%)

MV=2.75/(12.46%)

MV=$22.1

Dividend yield=dividend per share/share price per share

Dividend yield=2.27/22.1

Dividend yield=10.3%

5 0
3 years ago
Last week, a gift shop’s employees heard their longtime store manager announce that she is leaving. Now they’ve read an announce
MissTica

Answer: Uncertainty

Explanation: In simple words, uncertainty refers to a situation under which an individual or an entity is not sure about their belief or decision regarding a particular subject matter.

In the given case, the employees of the store are unknown to the reality of how the new manager will be.

Hence from the above we can conclude that the above case demonstrates uncertainty.

               

6 0
2 years ago
Individuals who want to work and have searched for work in the prior​ year, but are not currently looking for work because they
Makovka662 [10]

Answer:

Discouraged; are not

Marginally attached; are not

Employed; are

Explanation:

Those workers who have had a job in past but are currently unemployed and are not currently looking for work because they were not able to find job are called discouraged workers.

They believe they will not find a job now so have stopped looking. These workers are not included in the labor force.

Marginally attached workers are those workers who are not employed but are not looking for work because of a number of reasons such as illness, school, responsibility, etc. These workers are also not included in labor force.

Those workers who would like to have full-time job but are employed part-time are considered employed. These workers are included in the labor force.

8 0
3 years ago
What’s the difference payment wise between a debit and credit card?
Jet001 [13]
A credit card is borrowed money and you pay it in return later on. Debit card is money from your bank account
3 0
2 years ago
Rosita purchased a bond for $989 that had a 7% coupon and semiannual interest payments. She sold the bond after 6 months and ear
Len [333]

Answer:

The price she sold the bond is $1,001.47

Explanation:

The formula for yield return in given as ;

Yield to maturity= (Annual interest+ per value - market price ÷ numbers of years to maturity)/per value+ market price÷ 2

048 = (Selling price + [(.07 × $1,000)/2] - $989)/$989

Making selling price the subject of formula we have this as the abswer

Selling price = $1,001.47

3 0
3 years ago
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