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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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The target income refers to the income planned for the future. The answer is letter C. This type of income is expected by the management at a given specified accounting period. This now would direct the key functions of the management in relation to the action that it will do to achieve the certain income. 
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4 years ago
Murray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay divi
frozen [14]

Answer:

Cost of retained earnings  = 0.13

Explanation:

given data

(D1) = $1.80

current price = $36  

growth rate = 9 percent

solution

we get here Cost of retained earnings  (Ke) that is express as

Cost of retained earnings = ( D1 ÷ P ) + g    ................1

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put here value and we get

Cost of retained earnings =  (1.80 ÷ 36 ) + 0.08

Cost of retained earnings  = 0.13

4 0
3 years ago
Jamal tried to apply for a mortgage. However, he was turned down for the loan because the loan officer noticed that he had made
tino4ka555 [31]

Answer:

The two questions that he must ask from himself are:

  • Do you have credit report?
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Explanation:

The reason is that the banks are giving you money and are worried about whether or not you are going to pay them back or not. So they require some evidences whether the person has any credit report and good credit score which shows that the person will be worried to pay the bank and if he is not able to pay he find alternative as he is a responsible person. So these two questions assesses whether the person is capable to pay the mortgage.

7 0
3 years ago
Cayo Casta Cabins Corporation recently purchased Ship Island Resort and Casino and the land on which it is located with the plan
PilotLPTM [1.2K]

Answer:

4) recorded as a reduction of the cost of the land.

Explanation:

When you are calculating the cost of any land purchased, you must start with the purchase price and add all the expenditures necessary for getting the land  ready, e.g. legal fees, taxes, real estate commissions, land grading, clearing the trees, etc., and subtract any revenue obtained, e.g. from the sale of salvaged materials or timber.

total cost of land = purchase price + (fees, commissions, grading, clearance expenses, taxes, etc.) - revenue (salvaged materials, scrap, timber, etc.)

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3 years ago
What would the new optimal solution of product 3 sold for $15, and 100 hours of labor could be purchased?.
slega [8]

Answer:

I don't know sorry sorry forgive me

Explanation:

sorry

5 0
3 years ago
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