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
faust18 [17]
3 years ago
13

Lohn Corporation is expected to pay the following dividends over the next four years: $18, $14, $13, and $7.50. Afterward, the c

ompany pledges to maintain a constant 4 percent growth rate in dividends forever. If the required return on the stock is 14 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
Lerok [7]3 years ago
4 0

Answer:

current share price = $85.96

Explanation:

Find the PV of each dividend

PV= FV / (1+r)^t

r= required return

t= total duration

PV(D1) = 18 / (1.14)= 15.78947

PV(D2) = 14 / (1.14^2) = 10.77255

PV(D3) = 13 / (1.14^3) = 8.774630

PV(D4) = 7.50 / (1.14^4) = 4.44060

PV(D5 onwards) is a two-step process, first PV of growing perpetuity;

PV(D5 onwards) at yr4 =[7.50*(1+0.04) ] / (0.14-0.04) = 78

second, finding PV today ; PV(D5 onwards) at yr 0 = 78 / (1.14^4) = 46.18226

Add the PVs to get the current share price = $85.96

You might be interested in
Why should employees be wary of participating in the grapevine in a business
Zielflug [23.3K]

First, we need to understand what grapevine means in business communication. Therefore, grapevine communication is a form of informal communication within a business organization, in other words, information is never accurate with grapevine, and this will certainly pose a threat to any business, remember, effective communication is an integral part of any organization.

Below are some of the reasons why managers should be wary of grapevine communication


1) Communications through grapevines are often not trustworthy as it is an unofficial way of communication.

2) It might cause a hostile environment between lower level staff and the executives, for instance, a colleague tells you that the boss is not happy with your work, or that your boss said he doesn't like you, this might be false, and it might affect your attitude towards your boss.

3) It can lead to discouraging news, which can then affect productivity.  Imagine a story flying around the office, that management wants to retrench workers or wants to approve salary cut, now if this information is false, so many people within the lower level staff, will get discouraged, or get unnecessarily worried, this will certainly affect there work rate.


 Managers are often advised to be wary of grapevine within an organization, however, managers should note that grapevine cannot be eliminated from any organization, but it can be minimized if managers engage in effective communication with their employees.

5 0
3 years ago
Which best describes a way people can use personal loans? to buy a house to buy a car to pay for college to pay for groceries.
Bas_tet [7]

The best way people can use their Personal loans is to buy or pay for groceries. As there are other separate loans for the things like car, home and pay for college.  

<h3>what is a personal loan?</h3>

A loan is issued for non-essential purposes, usually to a person with a good credit score who is not required to submit collateral to back up the loan.

A personal loan can be utilized for practically any reason, including settling credit card debt, home upgrades, and large purchases.

Thus option D is correct.

For further details about the personal loan refer to this link:

brainly.com/question/19106746

4 0
2 years ago
Read 3 more answers
What happens to supply when input costs go up?
nordsb [41]
Supply costs also go up
8 0
3 years ago
Read 2 more answers
Following is information on an investment considered by Hudson Co. The investment has zero salvage value. The company requires a
Liono4ka [1.6K]
Hi I think that is 3.
6 0
2 years ago
The narrowest definition of the money supply (M1) includes:
fenix001 [56]

Answer:

c. cash, checking account balances, and travelers' checks.

Explanation:

Money Supply is the concept that means the amount of the liquid financial products and total currency in the market or economy. It is regulated the macro-economically by the monetary policy. So, there are types of measures of money supply or stock:

-M0: narrowly, it means the hard currency in circulation

-MB: it equals M0+ the hard currency which are not technically in circulation and in bank reserves.

-M1: it is the most common one and equals M0 plus checking accounts plus travelers’ checks and other checkable deposits.

-M2: covers M1 and saving accounts and CDs.

-M3: it surrounds the larger deposits.

-MZM: finally, this indicates the money market deposits.

That’s why we could notice that M1 narrowly means the cash, checking account and travelers’ checks.

5 0
3 years ago
Other questions:
  • In your own words: what is the relationship between organizing and controlling?
    6·1 answer
  • Snackyville sells a wide variety of snacks to retail grocery stores. Snackyville recently released two new snacks: a popular tra
    8·1 answer
  • The united states' first large business bureaucracies began within which industry?
    10·1 answer
  • In order to qualify for the "white-collar" exemption as outside salespeople, the employees must be
    8·1 answer
  • Which of the following industries is most likely to exhibit the characteristic of free entry? a. nuclear power b. municipal wate
    5·1 answer
  • The Fama-French 3 factor model contains... Group of answer choices market, momentum, and liquidity risk factors none of the answ
    13·1 answer
  • Western Airlines operates five flights daily between Chicago and Phoenix during the winter. One flight leaves Phoenix at 12:10 P
    10·1 answer
  • ANYONE DOWN TO VIBE WITH MW ON SNAP ILL ADD BACK!!!!
    12·2 answers
  • The capital investment evaluation method that subtracts the initial investment from the discounted future net cash flows from th
    11·1 answer
  • Strategic planning starts with a _____ that reflects a firm’s vision, purpose, and values.
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!