Answer:
The price of the stock today is $16.83
Explanation:
The current price per share can be estimated using constant growth model of the DDM. The price per share can be calculated using the following formula,
P0 = D1 / r - g
To calculate the price today, we use the dividend expected for the next period. Thus, using the dividend that will be paid at t=11 or D11, we can calculate the price of the stock at t=10. We further need to discount this price using the required rate of return for 10 years to calculate the price of the stock today.
P10 = 6 * (1+0.04) / (0.14 - 0.04)
P10 = $62.4
The price of the stock today will be,
P0 = 62.4 / (1.14)^10
P0 = $16.83
Answer:
9.1%
Explanation:
To calculate the annual rate of return on this account you can use the following formula:
r = ( FV / PV )^1/n - 1, where
r= rate of return
FV= future value= 25,000
PV= present value= 450
n= number of periods of time= 46
r=(25,000/450)^(1/46)-1
r=55.56^0.0217-1
r=1.091-1
r=0.091 → 9.1%
According to this, the annual rate of return on this account was 9.1%.
Answer:
The answer is attached for ease of understanding and reference.
Explanation:
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