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son4ous [18]
3 years ago
5

Consider a firm with a 9.5% growth rate of dividends expected in the future. The current year’s dividend was $1.32. What is the

fair present value of the stock if the required rate of return is 13 percent?
Business
1 answer:
Over [174]3 years ago
6 0

Answer:

Using the DDM method we can find the fair value of the stock. For that we need the current years dividend, the company's growth rate and the required rate of return on the stock.

The formula for DDM is

Value = D*(1+G)/R-G

D= 1.32

G= 9.5%

R=13%

1.32*(1+0.095)/(0.13-0.095)= 41.29

The fair present value of the company based on the dividend discount model is $41.29.

Explanation:

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aliya0001 [1]

A tradeoff is a balance achieved between two desirable but incompatible feature. So the reasonable answer would be B

8 0
3 years ago
Learners with a _____ learning style prefer reading, writing, and speaking. naturalistic logical/mathematical verbal/linguistic
Masteriza [31]

Answer:

Verbal/linguistic learners prefer learning activities that involve reading, writing, and speaking.

Explanation:

7 0
2 years ago
A firm has $76,000,000 in debt, which accounts for 43% of their total funds raised; the after-tax cost of these funds is 6.10%.
Digiron [165]

11.55% is the weighted average cost of capital for these funds

Explanation:

Firm has 76000000 in debt and 100000000 in equity. Thus the proportion of debt =

             = 76000000/(76000000 + 100000000)

             = 43.18%

and proportion of equity =  1 - 43.18%  = 56.82%

Therefore, WACC =  0.4318 * 6.1 + 0.5682 * 15.7

                               = 11.55%

7 0
3 years ago
For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happe
WARRIOR [948]

For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer who expects a price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will <u>fall</u>, and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by<u> reducing </u>the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to <u>fall below</u> the natural level of output in the short run.

<u>Explanation:</u>

In the example that has been given above, it talks about the production of the soya bean farmers and their responses to the change the supply of soyabean in the market with the change in the price level of the same in the market given.

With the decrease in the price of the product below the expected level, the supply of the product in the market will be decreased by the suppliers in the market.

8 0
3 years ago
rancis Inc.'s stock has a required rate of return of 10.25%, and it sells for $87.50 per share. The dividend is expected to grow
Nat2105 [25]

Answer:

$3.72

Explanation:

Francis incorporation stock has a required rate of return of 10.25%

The stock is sold at $87.50 per share

The growth rate is 6% per year

Therefore, the expected dividend can be calculated as follows

= Po(rs-g)

= $87.50(10.25%-6%)

= $87.50×4.25

= $3.72

Hence the expected year end dividend is $3.72

7 0
3 years ago
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