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Lostsunrise [7]
3 years ago
15

Green Glass recently pays dividends. Future dividends are projected at $2.5, $3.5, and $4.5 over the next three years, respectiv

ely. Beginning four years from now, the annual dividend is expected to grow at 4% annually forever. What is one share of this stock worth to you today if you require a 12 percent rate of return on similar investments?
Business
1 answer:
Evgen [1.6K]3 years ago
4 0

Answer:

The price of one share of such a stock today is $49.86

Explanation:

The stock's price today under the Dividend discount model can be calculated by discounting the expected future dividends to the present value using an appropriate discount rate. When the dividend growth becomes constant, we calculate the terminal value and discount it back too. The appropriate discount rate is the required rate of return. The worth of one of such stock today is,

V0  =  2.5 / (1+0.12)  +  3.5 / (1+0.12)^2  +  4.5 / (1+0.12)^3  +  

[4.5 * (1+0.04) / (0.12 - 0.04)]  /  (1+0.12)^3

V0 = $49.86

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Belinda has found a business opportunity she believes will be​ successful, but there are already a couple companies in that mark
Pavel [41]

Answer: Option D              

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   In the given case, Belinda is trying to establish business in the industry which already has heavy competition. Therefore, if she wants to establish a customer base, she must need some competitive advantage so that she can operate with low profits initially.

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6 0
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edna kropp's gross income for a year included salary, $12,400; commission, $27,750; intrerest, $440. Her adjustment to income we
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BigorU [14]
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Answer:

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