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Alina [70]
3 years ago
9

Fire Hydrant Pet Supply just paid its first annual dividend of $0.75 a share. The firm plans to increase the dividend by 2.9 per

cent per year indefinitely. What is the firm's cost of equity if the current stock price is $16.90 per share
Business
1 answer:
AleksandrR [38]3 years ago
8 0

Answer:

Cost of equity =  7.47%

Explanation:

<em>The Discounted Cash flow (DCF) Model; This is a technique used to value the worth of an asset. According to this model, the value of an asset is the sum of the present values of the future cash flows that would arise from the asset discounted at the required rate of return. </em>

Using this model,  the required rate of return is the cost of equity. It is given below as follows:

Cost of equity (Ke) =( D(1+g)/P) + g

Div in year 0, P= ex-div market price, g= growth rate in div.

D- 0.75 , g- 2.9%, P-16.90

For this question,

Ke= ( 0.75×(1+0.029)/16.90 ) + 0.029

=0.0746 × 100  

= 7.47%

Cost of equity =  7.47%

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Answer:

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Demand per hour for gasoline at a local station is normally distributed with a mean of 875 gallons and std deviation of 55 gallo
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The probability that demand is greater than 1800 gallons over a 2 hour period is : 0.5

<u>Given data :</u>

Mean value of gasoline per hour = 875 gallons

Standard deviation = 55 gallons

<h3>Determine the probability of demand being greater than 1800 gallons over 2 hours </h3>

Demand for gas in 1 hour = X₁

Demand for gas in 2 hours = X₁ + X₂

Therefore ; ( X₁ + X₂) ~ N ( u₁+u₂, sd₁² + sd₂² )

In order to  calculate probabilities for normals apply the equation below

Z = ( X- u ) / sd

where : u = 1800, sd = √ ( 55² + 55² ) = 77.78

using the z-table

P( Y > 1800) = P( Z > ( 1800 - 1800 ) / 77.78)

                    = P( Z>0 ) = 0.5

Hence we can conclude that The probability that demand is greater than 1800 gallons over a 2 hour period is : 0.5.

Learn more about probability : brainly.com/question/24756209

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5 0
2 years ago
Gloria deposited $500 into a bank account that earned 7. 5% simple interest each year. She earned $225 in interest before closin
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The number of years in which the money is in the account is 6 years.

<h3>What is simple interest?</h3>

Simple interest denotes the amount of payment that is received or paid by a person in return for anything pledged or given a loan.

The interest computed on the principal amount for a specified duration of time and rate of interest is called simple interest.

The formula of simple interest:

\text{SI}= \text{P}\times r \times t

Where, (P) stands for principal, (r) for interest rate, and (t) is for the time period.

<u>Computation </u><u>of a number of years:</u>

According to the given information,

P=$500,

r=7.5%,

t=?

SI= $225

Now, substitute the given values in the above formula, we have:

\text{SI}= \text{P}\times r \times t\\\\\$225=\$500\times\ 7.5\%\times t\\\\t= 6 \text{Years}

Therefore, the number of years is 6 years.

To learn more about the simple interest, refer to:

brainly.com/question/2793278

5 0
2 years ago
Jamie is looking for a new job. She used to be the top sales representative for the region and was expecting to be promoted. How
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Answer: Performance-Reward

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Layla Fox is a creative, imaginative, artistically sensitive individual who loves to take on new opportunities. She is a success
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4 0
3 years ago
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