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erica [24]
4 years ago
12

Hi-Tek is a young start-up company that is currently retaining all of its earnings. The company plans to pay a $2 per share divi

dend in Year 7 and increase that dividend by 2.2 percent per year thereafter. What is the current share price if the required return is 16 percent?
Business
1 answer:
Anika [276]4 years ago
5 0

Answer:

$5.95

Explanation:

Given that,

Dividend paid in Year 7 = $2 per share

Growth rate of dividend = 2.2%

Required return = 16 percent

Share price is the present value of all future dividends.

Present Value of future dividends at year 6:

= \frac{Dividend\ in\ year\ 7}{Required\ return - Growth\ rate}

= \frac{2}{0.160 - 0.022}

= \frac{2}{0.138}

= $14.49

Present value of dividends (Now):

= Present Value of future dividends at year 6 × (1 + Required return)^{-6}

= $14.49 × (1 + 0.16)^{-6}

= $5.95

Therefore, the current share price is $5.95 if the required return is 16 percent.

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You purchased 200 shares of ABC common stock on margin at $50 per share. Assume the initial margin is 50% and the maintenance ma
Helga [31]

Answer:

$35.71

Explanation:

The computation of the stock drop price is shown below:

Maintenance margin = Number of shares purchased × price - loan amount ÷  Number of shares purchased × price

30% = 200 shares × price - $5,000 ÷ 200 shares × price

30% × 200 shares × price = 200 shares × price - $5,000

60 × price = 200 shares × price - $5,000

After solving this, the price would be $35.71

And, the loan amount is equal to  

= Number of common stock shares purchased × per share value × initial margin

= 200 shares × $50 × 50%

= $5,000

4 0
3 years ago
Pizza and sub sandwiches are substitutes. if the price of pizza decreases, this will cause:______.
gavmur [86]

Pizza and sub sandwiches are substitutes. if the price of pizza decreases, this will cause: an increase in the quantity demanded and no change to the quantity supplied

What are substitutes?

Substitutes are goods that are used as alternatives, which means that the fact the decrease in price of pizza means that the quantity demanded would rise as more are demanded as the price reduces and vice versa.

There would be no change in quantity supplied because price decrease is not favorable for the suppliers of pizzas, since they would want to supply more at a higher price instead of supplying more at  a lower price

Find out more about substitutes on:brainly.com/question/23350334

#SPJ1

5 0
2 years ago
Use the following information to prepa owing information to prepare a statement of cash flows for the current year using the ind
chubhunter [2.5K]

Answer:

xxxxx.............................

5 0
3 years ago
Unlike need satisfaction selling, stimulus response selling focuses on customers rather than on salespeople. Question 13 options
taurus [48]

it is true that the stimulus response selling focuses on customers rather than on salespeople unlike need satisfaction selling

<h3>What is stimulus response sales?</h3>

A sales technique of Stimulus Response is an approach that emphasizes on saying the right thing at the right time to convince the buyer along a question-answer sequence in the negotiation of sales.

Therefore, it is true that the stimulus response selling focuses on customers rather than on salespeople unlike need satisfaction selling

Read more about <em>Stimulus Response</em>

<em>brainly.com/question/937756</em>

5 0
3 years ago
Suppose that workers from northern Minnesota, North Dakota, and Montana decide to emigrate to southern Canada. Refer to Scenario
irga5000 [103]

Answer:

c. The equilibrium wage will rise, and the equilibrium quantity of labor will fall

Explanation:

Because of the emigration of workers from the Northern Minnesota to Southern Canada, the equilibrium wage rates will rise and quantity of labor will fall.

This happens because the workers that left have already created a vacuum that will be eager to be filled by their employers who will be willing to increase wages for incoming workers to serve two purposes:

1. To entice them to work for the company and fill the vacuum

2. To try to make sure they stay and not leave another vacuum.

The reason the quantity of labour will fall is because of that vacuum created by the departed workers. It's this drop in labor that will make the equilibrium wages to increase.

7 0
3 years ago
Read 2 more answers
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