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dezoksy [38]
3 years ago
14

A company just paid a $2 dividend per share. The dividend growth rate is expected to be constant at 10% for 2 years, after which

dividends are expected to grow at a rate of 3% forever. If the company’s required return (rs) is 11%, what is its current stock price?
Business
1 answer:
Olin [163]3 years ago
5 0

Answer:

Do =  $2.00

D1= Do(1+g)1 =  $2(1+0.1)1 = $2.20

D2= Do(1+g)2 = $2(1+0.1)2 = $2.42

PHASE 1

V1 = D1/1+ke + D2/(1+ke)2  

V1 = 2.20/(1+0.11) + 2.42/(1+0.11)2  

V1 = $1.9820 + $1.9641

V1 = $3.9461

PHASE 2

V2 = DN(1+g)/ (Ke-g )(1+k e)n                                                                                                                                                                                                                                        V2 = $2.42(1+0.03)/(0.11-0.03)(1+0.11)2      

V2 = $2.4926/$0.0649

V2 = $38.4068

The current stock price is calculated as follows:

Po = V1 + V2

Po = $3.9461 + $38.4068

Po = $42.35

Explanation: This question relates to valuation of shares with 2-phase growth model.  The value of shares in the first phase will be determined by discounting the dividend for the 2 years by cost of equity. The dividends for year 1 and year 2 were obtained by subjecting the current dividend paid (Do) to growth rate.  

Moreso, the value of shares for the second phase was calculated by considering the last dividend paid(D2) and then subject it to the new growth rate. The adjusted dividend was then capitalized at the appropriate discount rate of the company.

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Andre45 [30]

Answer:

Normal spoilage rate = 1.6978% (Approx)

Explanation:

Given:

Total unit produce = 11,900 units

Normal spoil unit = 200 units

Abnormal spoil unit = 120 units

Total normal unit produce = 11,900 - 120 = 11,780

Computation of normal spoilage rate:

Normal spoilage rate = Normal spoil unit / Total normal unit produce

Normal spoilage rate = 200 / 11,780

Normal spoilage rate = 0.0169779287

Normal spoilage rate = 1.6978% (Approx)

6 0
3 years ago
The cutting edge sells ice skates. total sales are $845,000, total variable expenses are $245,050 and total fixed expenses are $
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If the cutting edge sells ice skates. total sales are $845,000, total variable expenses are $245,050 and total fixed expenses are $302,000. the variable expense ratio is: 29%.

<h3>Variable expense ratio</h3>

Using this formula

Variable expense ratio=Total variable expense /Total sales

Let plug in the formula

Variable expense ratio=$245,050/ $845,000

Variable expense ratio=0.29×100

Variable expense ratio=29%

Therefore If the cutting edge sells ice skates. total sales are $845,000, total variable expenses are $245,050 and total fixed expenses are $302,000. the variable expense ratio is: 29%.

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Answer:

D.

Explanation:

Based on the information provided within the question it can be said that the design should positively influence consumer behavior. This is because it has been implemented specifically for this. Marcus hopes that the smell would put customers at ease and make them like the store as well as the products more, which in term would increase sales.

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Drug sniffing dogs must be 95% accurate in their responses, since we don't want them to miss drugs and also don't want false pos
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The question: Drug sniffing dogs must be 95% accurate in their responses, since we don't want them to miss drugs and also don't want false positives. a new dog is being tested and is right in 46 of 50 trials. find a 95% confidence interval for the proportion of times the dog will be correct.

 

The answer of the following question:

The 95% confidence interval for the proportion of times the dog will be corrected is: 0.845, 0.995

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William and Charlotte Collins divorced in November of Year 1. William moved out and Charlotte remained in their house with their
icang [17]

Answer:

Charlotte does indeed have a desire or priority.

Explanation:

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So that Charlotte does having a desire.

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