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Kobotan [32]
4 years ago
13

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

will sell the stock for​ $27.00. If you want to earn​ 11% on this​ investment, what is a fair price for this stock if you buy it​ today?
Business
1 answer:
Vika [28.1K]4 years ago
8 0

Answer:

Po =   <u>D1   </u>     +  <u> D2   </u>  +    <u> D3    </u>    +          <u> D4 + P4</u>

        (1 +K)         (1 +K)2       (1 + k)3               (1 + K)4

Po =  <u> $2.00 </u>   +  <u> $2.00  </u>   +   <u>$2.00 </u>    +    <u>$2.00 + $27.00</u>

         (1 + 0.11)      (1 + 0.11)2    (1 + 0.11)3        (1 + 0.11)4

Po =  <u> $2.00  </u>  +   <u>$2.00</u>     +  <u> $2.00</u>     +    <u>$29.00</u>

          (1.11)              (1.11)2           (1.11)3             (1 .11)4

Po = $1.80       +     $1.62     +   $1.46      +      $19.10

Po = $23.98

Explanation:

The current market price  of the stock is a function of dividend in year 1 divided by 1 + r plus the dividend in year 2 divided by 1 + r raised to power 2 plus dividend in year 3 divided by 1 + r raised to power 3 plus the aggregate of dividend and market price in year 4 divided by 1 + r raised to power 4. r denotes required return on stock.

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Which process involves monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and ev
GarryVolchara [31]

Answer: Controlling risk

Explanation:

A risk event is an uncertain event or occurrence that can affect the achievement of the objectives of a project.

Controlling risk involves monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project.

3 0
3 years ago
Anwer owns a rental home and is involved in maintaining it and approving renters. During the year he has a net loss of $8,000 fr
Evgesh-ka [11]

Solution:

(1) Maximum possible $25,000 deduction before phase-out

(2) Maximum deduction phase-out is $22,500

    [($145,000 AGI - 100,000) × 0.5]

(3) Current year overall loss $2,500 (1) - (2)

(4) Rental loss in current year $8,000

(5) Current year leasing deficit of 2,500 dollars, Lesser of (3) or (4)

Passive loss carry forward $5,500 (4) - (5)

8 0
4 years ago
Which quality is a requirement in order for a destination to become a tourism destination area (TDA)?
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Should be accessible for road...,
7 0
4 years ago
selling a firm's unneeded assets is a reasonable last resort if sales revenues are declining and when neither equity capital nor
defon

True, If sales revenues are falling and neither equity nor debt capital could be discovered to meet a firm's a need capital, selling off its surplus assets is indeed a reasonable last resort.

What is an Asset?

An asset is a resource with monetary value that an individual, corporation, or country owns or controls with the expectation of future benefit. A company's assets are reported on its balance sheet. They are divided into four categories: current, fixed, financial, and intangible. They are purchased or created in order to increase the value of a company or to benefit its operations. An asset is anything that can generate cash flow, reduce expenses, or increase sales in the future, whether it's manufacturing equipment or a patent. Assets are reported on a company's balance sheet. They are purchased or created in order to increase the value of a company or to benefit its operations. An asset is anything that can generate cash flow, lower expenses, or increase sales, whether it's manufacturing equipment or a patent.

To learn more on Assets from the link:
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4 0
1 year ago
Use the weighted-average inventory method for the following problem: The beginning inventory on August 1 has two items that are
Andrej [43]

Answer:

Average cost units in inventory=$1,205

Explanation:

August 8

Weighted  average cost in August 8

=( (2 × 100 )+ (3 × 250))/5=$190

Cost of goods sold in August 15 = 190× 3= 570

Balance in inventory in August 15 = 950 - 570 =380

Weighted average cost in August 25 = 380 + (3* 275)/(2+3)= 241  per

Average cost of units = $241 per unit

Average cost units in inventory in August 25= $241×5 =1205

Average cost units in inventory=$1,205

6 0
3 years ago
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