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
_____ funds are highly speculative investments that seek large profits from capital gains. group of answer choices
galina1969 [7]

​Aggressive growth funds are highly speculative and seek large profits from capital gains.

What Is an Aggressive Growth Fund?

An aggressive growth fund is a mutual fund that seeks capital gains by investing in the shares of growth company stocks. Investments held in these funds are companies that demonstrate high growth potential, but also carry greater risk.

What is the advantage of aggressive growth?

Growth has its advantages; it enables a company to reach more customers, generate more sales, and put money back in the business.

Are aggressive growth funds a good investment?

Aggressive growth funds are identified in the market as offering above average returns for investors willing to take some additional investment risk. They are expected to outperform standard growth funds by investing more heavily in companies they identify with aggressive growth prospects.

Learn more about aggressive growth fund:

brainly.com/question/14698110

#SPJ4

5 0
1 year ago
Which employees should be aware of how to turn off power to a shop in an emergency?
Vinil7 [7]

Answer:

Last one.

Explanation:

All the workers should know how to turn off the power in an emergency. Just in case there isn't one, there is the other.

5 0
2 years ago
During the current fiscal year, Jeremiah Corp. signed a long-term noncancellable purchase commitment with its primary supplier.
cricket20 [7]

Answer:

Explanation:

The journal entry is shown below:

Not realized gain or loan A/c Dr $300,000

        To Estimated liability on purchase of raw material $300,000

(Being the difference is recorded)

The difference is computed by

=  Purchase value of raw material - market value of raw material

= $1,500,000 - $1,200,000

= $300,000

5 0
3 years ago
Francine wants to become a school counselor. Which is the academic requirement for this career?
Zigmanuir [339]
The academic career to become a school counsellor can be either bachelor in Psychology, Education or any other related field. This is because of these academic tracks deals and interacts with people. School counsellors need to be open and ready to interact with students, teachers and parents.
6 0
3 years ago
Read 2 more answers
The Wiz Co. owes $60 to its bondholders. The company expects to have a cash flow of $136 if the economy continues as is but that
Schach [20]

Answer:

$24

Explanation:

Calculation for the amount that the bondholders

will paid in the case of a recession

Using this formula

Amount to be paid by Bondholder=Decreased in cash flow- Legal and other fees

Let plug in the formula

Amount to be paid by Bondholder = $54 − $30

Amount to be paid by Bondholder= $24

Therefore the amount that the bondholders will paid in the case of a recession is $24

3 0
2 years ago
Other questions:
  • According to the FBI Bank Crime​ Statistics, there were nearly​ 4,000 bank robberies in the United States in 2014. The FBI claim
    8·1 answer
  • Absco Enterprises meticulously follows all laws and regulations and attempts to satisfy ethical​ requirements, but it does not g
    7·2 answers
  • A _____ is something that has been learned.
    6·2 answers
  • Ashley wants to increase the profits of her e-business. what two ways can be used to accomplish her goal of increasing profits?
    15·1 answer
  • What branches or specializations concentrate their efforts and work on business, work and life satisfaction in psychology ?
    7·1 answer
  • Most successful firms have a clearly-defined, well-written marketing plan that specifies the marketing activities to be performe
    10·1 answer
  • The load rating limit can be exceeed in which of the following circumstances?
    12·1 answer
  • The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save mo
    14·1 answer
  • The broker has noticed that a great number of people who are buying in the neighborhood where his listing is located speak Russi
    13·1 answer
  • In the business cycle, which term best fits the labeled point on the graph?
    9·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!