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Romashka-Z-Leto [24]
10 months ago
12

how much of a stock's $30 price is reflected in pvgo if it expects to earn $4 per share, has an expected dividend of $2.50, and

a required return of 20%?
Business
1 answer:
Kruka [31]10 months ago
7 0

The amount of the stock price that will be reflected in the PVGO is $10

The value of an organization's potential future growth is symbolized by the acronym PVGO, or "present value of growth opportunities." It represents the potential value for the organization by reinvesting its earnings back into the business.

Expected Dividend payment (D) = $2.50

Total Earnings (E) = $4

Rate of return (ROR) = 20%

Step 1. Using no growth rate (GR), computing the stock price (SP)

Since the growth rate is not specified, 0% is taken as the default value.

The stock price (SP) = E/ROR

= $4 / 20%

Stock price = $20.

Step 2. Computing the SP reflected in PVGO.

So, total SP with no GR

= $30 - $20

Stock price with no growth rate = $10

Hence, the $10 will be reflected in the PVGO

Learn more about PVGO:

brainly.com/question/28434542

#SPJ4

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3 years ago
Round Dot Inns Is preparing a bond offering with a coupon rate of 6 percent, paid semiannually, and a face value of $1,000. The
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a.The bonds will sell at a premium if the market rate is 5.5 percent.

Explanation:

Following information provided in the question

Coupon rate = 6%

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And if we consider the interest rate 5.5%

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2 years ago
Professional skepticism related to detecting possible fraud involves the validation of information through probing questions. cr
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3 years ago
What is the difference between a monopolistically competitive demand curve and a perfectly competitive demand curve
shtirl [24]
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2 years ago
Aspen's Distributors has a levered cost of equity of 13.84 percent and an unlevered cost of capital of 12.5 percent. The company
Reptile [31]

Answer:

8.60%

Explanation:

We use the MM proposition II with taxes

r_e = r_a + \frac{D}{E} (r_a-r_d)(1-t)

ra 0.125

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E 9600 (14,600 assets = 5,000 liab + equity)

rd ??

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re 0.1384

We set p the formula and solve:

0.1384 = 0.125 + \frac{5,000}{9,600} (.125-r_d)(1-.34)

0.1384 = 0.125 + \frac{5,000}{9,600} (.125-r_d)(1-.34)

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0.0134 = 0.34375\times 0.125 - 0.34375\times r_d

r_d = (0.34375\times 0.125 - 0.0134)\div 0.34375

rd = 0.860181818 = 8.60%

6 0
2 years ago
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