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
butalik [34]
3 years ago
9

A firm expects to increase its annual dividend by 20 percent per year for the next two years and by 15 percent per year for the

following two years. After that, the company plans to pay a constant annual dividend of $3 a share. The last dividend paid was $1.00 a share. What is the current value of this stock if the required rate of return is 12 percent?
Business
1 answer:
Law Incorporation [45]3 years ago
6 0

Answer:

Current price = $20.50

Explanation:

Data provided in the question;

Growth rate, g = 20% = 0.2 for the 2 years

Growth rate, g' = 15% = 0.15 for the following 2 years

after 4 years annual dividend = $3

Last dividend paid, D0 = $1

Required rate of return, r = 12% = 0.12

Now,

D1 = D0 × (1 + g)

= $1 × (1 + 0.2)

= $1.2

D2 = $1 × (1 + 0.2)²

D3 = $1 × (1 + 0.2)² × (1 + 0.15)

D4 = $1 × (1 + 0.2)²  × (1 + 0.15)²

D5 = 3

Therefore,

Current price = \frac{1.2}{(1 + 0.12)} + \frac{\$1\times(1 + 0.2)^2}{(1 + 0.12)^2} + \frac{\$1\times(1 + 0.2)^2\times(1 + 0.15)}{(1 + 0.12)^3} + \frac{\$1\times(1 + 0.2)^2\times(1 + 0.15)^2}{(1 + 0.12)^4} + \frac{\frac{\$3}{0.12}}{(1+0.12)^4}

⇒ Current price = $20.50

You might be interested in
What is one way that the government cannot prevent a budget deficit?
Anna007 [38]

Answer:

The answer is Selling Stocks

3 0
2 years ago
JACK Mchen
Makovka662 [10]

Answer:

Setting short term goals now helps you reach long term goals later

6 0
3 years ago
(100 POINTS AND BEAINLYESt)<br> (Question 2 Only)
SpyIntel [72]

Answer:

D

Explanation:

Humans are always looking for things to help improve their daily lives, seeing advertisements showcase new items for them and get them to buy their stuff.

3 0
3 years ago
Read 2 more answers
Antonia's presentation will discuss the advantages and disadvantages of selling her company's product exclusively online. The mo
PSYCHO15rus [73]

Answer:

comparison/contrast

Explanation:

The most effective organizational strategy for Antonia's presentation would be by comparison/contrast. This organizational strategy focuses on comparing all the pros and cons of choosing to go a certain route in a business decision with the pros and cons of choosing to go another route. This is what Antonia is planning to discuss with the advantages and disadvantages, but in order to convince the viewers she needs to compare this with the advantages and disadvantages of not selling exclusively online.

5 0
3 years ago
Marketers with successful brands sometimes hesitate to expand their brands because
Yakvenalex [24]

Available Option:

a. it is costly to maintain many product lines, and it might weaken the brand's meaning.

b. it is often difficult to get additional marketing communications coverage for the brand.

c. the current economy can only support a limited number of product options.

d. manufacturing divisions usually control brand expansion and are often in conflict with the marketing division.

e. Federal Trade Commission regulations limit the number of products that can be marketed under an individual brand name.

Answer:

Option A. It is costly to maintain many product lines, and it might weaken the brand's meaning.

Explanation:

The reason is that adding brand in the existing highly valued brand names require maintaining the brand's meaning and reputation which results in incurring higher costs in quality management, customer locating, making sales and other costs. The poor feedback of a new product can result in the decline in the trust of previous highly reputed brands which can affect the firm severely so the marketers might avoid such inclusions of brands.

4 0
3 years ago
Other questions:
  • XYZ Corp is doing a study of consumers' use of soap across the US. The questiuonnaire for the sttudy will include questions abou
    6·1 answer
  • Economics is a social science that studies how individuals, institutions, and society may:
    10·2 answers
  • You want to invest in a stock that pays​ $2.00 annual cash dividends for the next four years. At the end of the four​ years, you
    13·1 answer
  • What are some of the similarities and differences between the CTSOs of HOSA and Educators Rising? Please describe what makes the
    9·1 answer
  • Healthy Foods Inc. sells 60-pound bags of grapes to the military for $15 a bag. The fixed costs of this operation are $90,000, w
    12·1 answer
  • Consumer products are a. products used in the production of other items. b. products an industrial buyer will make an effort to
    8·1 answer
  • A company manufacturing shirts for a department store decides to create a new style of cotton shirt. The company would most like
    15·1 answer
  • TP sells franchises in the Old Fast Food chain. TP sells a franchise to Choi for $100,000 by cashier's check. Choi then hears th
    14·1 answer
  • As we move toward a cashless society, which of the following will become vital for businesses that meet clients away from the of
    8·1 answer
  • Adidea Corp. Estimates that $5,670 of its accounts receivables are uncollectible. How will the company record the transaction? T
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!