1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
yawa3891 [41]
1 year ago
10

starskeep, inc., is a fast-growing technology company. the firm projects a rapid growth of 40 percent for the next two years and

then a growth rate of 20 percent for the following two years. after that, the firm expects a constant-growth rate of 8 percent. the firm expects to pay its first dividend of $1.25 a year from now. if your required rate of return for such stocks is 20 percent, what is the current price of the stock?
Business
1 answer:
tino4ka555 [31]1 year ago
3 0

When the required rate of return for such stocks is 20 percent, the current price of the stock is 15.63.

<h3>What is stock?</h3>

Stock in finance refers to all of the shares that make up a corporation's or company's ownership. A single share of stock represents fractional ownership of the corporation based on the total number of shares. A stock is a broad term that refers to any company's ownership certificates.

The price will be calculated thus:

D1 = 1.25

D2 = 1.25 × (11+.40)

D3 = 1.25 × (1+.40) × (1+.20)

D4 = 1.25 × (1+.40) × (1+.20)^2

P4 = 1.25 × (1+.40) × (1+.20)^2 × (1+.08)/(.20 - .08)

Note that d is the dividend.

Current Stock Price = 1.25/(1+.20)^1 + 1.25*(1+.40)/(1+.20)^2 + 1.25*(1+.40)*(1+.20)/(1+.20)^3 + 1.25*(1+.40)*(1+.20)^2/(1+.20)^4 + 1.25*(1+.40)*(1+.20)^2*(1+.08)/(.20 - .08)*(1+.20)^4 = 15.625 or 15.63

Therefore, the current price is 15.63.

Learn more about stock on:

brainly.com/question/25818989

#SPJ1

You might be interested in
Classify each of the following based on the macroeconomic definitions of saving and investment.
prohojiy [21]

Answer:

  • a. Susan purchases stock in Pherk, a pharmaceutical company.  --  Investment
  • b. Megan buys new bulldozers for her construction firm.   --  Investment
  • c. Larry purchases a certificate of deposit at his bank.   --  Saving
  • d. Raphael takes out a mortgage for a new home in Detroit.  --  Saving

Explanation:

  • The investment is a what is spent on the goods and services that are not consumed but are durable and the savings are what is left over after the national incomes are spent on the consumption of the goods and the services and an purchase of stock.
  • the buying of the construction firm is a type of investment and the purchase of a certificate of deposit and mortgage for a new home is the type of the saving which is for the future use.
6 0
3 years ago
Companies usually buy (Click to select) assets. These include both tangible assets such as (Click to select) and intangible asse
iren [92.7K]

Answer:

<em>Now fit each of following terms into the most appropriate space</em><em>: Financing, real, bonds, investment, executive airplanes, financial, capital budgeting, brand names.</em>

Companies usually buy <u>real</u> assets. These include both tangible assets such as <u>executive airplanes</u> and intangible assets such as <u>brand names</u>. To pay for these assets, they sell <u>financial</u> assets such as <u>bonds</u> . The decision about which assets to buy is usually termed the <u>investment</u> or <u>capital budgeting </u>decision. The decision about how to raise the money is usually termed the <u>financing</u> decision.

4 0
3 years ago
The December 31, 2018, balance sheet of Whelan, Inc., showed $154,000 in the common stock account and $2,790,000 in the addition
Illusion [34]

Answer:

Whelan, Inc.

The cash flow to stockholders for the year is $159,000, representing the cash dividends paid during 2019.

Explanation:

Cash flow to stockholders is the amount of cash that a company pays out to its shareholders, usually in the form of cash dividends.  Mainly, cash flows to stockholders in two major ways: dividends and stock price increases when shares are sold.  Dividends are cash flows to stockholders from the company.  These are usually determined by the board of directors.  Stock price increases are cash flows to stockholders from the stock exchange market.  They are determined by the company's performance and the sentiments of the investors in an open market with reference to the company's financial performance and position.

6 0
3 years ago
How do people keep track of the amount of money in their checking accounts?
mr_godi [17]
Using a check register log
8 0
3 years ago
On January 1, 2013, the Excel Delivery Company purchased a delivery van for $44,000. At the end of its five-year service life, i
Lubov Fominskaja [6]
This question is really confusing. I have no idea how to solve it.
8 0
3 years ago
Other questions:
  • The admissions director at big city university proposed using the iq scores of current students as a marketing tool. the univers
    14·1 answer
  • There are ____ members of the Federal Reserve Board of Governors. Which of the following contributes to making the Federal Reser
    13·1 answer
  • Which two things do benefits tell you about a product
    13·1 answer
  • Two currently owned machines are being considered for the production of a part. The capital investment associated with the machi
    13·1 answer
  • An electronic ________ is essentially a collection of personal computers networked together with sophisticated software tools to
    5·1 answer
  • Rank the steps of the (sandwich) ELISA procedure from first step to last step. Do not overlap any steps.
    11·1 answer
  • "The average monthly rent for a two-bedroom apartment in City A is $820 with a standard deviation of $86. The average monthly re
    14·1 answer
  • 3. Prefab, a furniture manufacturer, uses 20,000 square feet of plywood per month. Its trucking company charges Prefab $400 per
    5·1 answer
  • Can anyone join my quiz<br><br> code in explanation
    9·1 answer
  • The Federal Reserve ________ pay interest on reserves held on deposit. The European System of Central Banks ________ pay interes
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!