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Sonbull [250]
4 years ago
12

A firm is planning on paying its first dividend of $2 three years from today. After that, dividends are expected to grow at 6% p

er year indefinitely. The stock's required return is 14%. What is the intrinsic value of a share today
Business
1 answer:
BabaBlast [244]4 years ago
7 0

Answer:

The intrinsic value of a share today is $16.87

Explanation:

Intrinsic Value of the share is calculated as below.

Dividend Valuation method is used to value the stock price of a company based on the dividend paid, its growth rate and rate of return. The price is calculated by calculating present value of future dividend payment.

Value of Share = Dividend / (Rate of return - Growth rate)

placing values in the formula

Value of share = $2 / (14% - 6%) = $25

$25 is the value of share after 3 year, to calculate today's value we have to discount it as below

Today's value of share = $25 x ( 1 + 14% )^-3 = $16.87

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iogann1982 [59]

Answer:

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Explanation:

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6 0
3 years ago
Imagine that you own a property that is exactly 2.2 acres large. You want to sell your property, but your realtor tells you that
BlackZzzverrR [31]

Answer:

8,000 m²

Explanation:

you must first change the size of your lot from acres to square miles = 2.2 acres / 640 acres per square miles = 0.0034375 square miles

now we can convert to square kilometers = 0.0034375 miles x 2.56 square kilometers per square miles 0.0055 square kilometers

there are 1,000,000 m²´per km², so you have 0.0088 km² x 1,000,000 = 8,800 m²

7 0
3 years ago
Suppose Bev's Bags makes two kinds of handbags--large and small. Bev rents an industrial space where she keeps the fabric, the i
konstantin123 [22]

Answer: Zero

Explanation: As per the subject matter of cost accounting and economics. Variable cost can be defined as the cost which changes its level with the level of output produced unlike fixed cost which remain constant at all levels.

Electricity bill, raw materials and packaging are some common examples of variable cost.

So from the above explanation we can conclude that if Bev produce no bags there variable cost would be zero.

7 0
3 years ago
The Fed has decided to expand the money supply, leading to lower interest rates. As a partner in a tech start-up, you react to t
Alona [7]

Answer:

A, B and D

Explanation:

Expanding the money supply is an exercise of expansionary monetary policy.

This decision will first allow our tech startup to acquire cheaper loans and expand our operations, this expansion in operations will result in new employment opportunities and hence as a result, unemployment will be reduced assuming this is a general trend in the economy.

This decision also directly reflects an increased investment and hence the GDP on the whole and the investment part of GDP would both increase,

GDP = C + I + G + (X - M), where I = investment.

This change in macro economy will increase aggregate demand due to expansionary effects. Increase in imports is not conclusive as it may or may not happen depending upon the demand state.

Hope this helps.

8 0
3 years ago
a 1000 par value 18-year bond with annual coupons is bought to yield an annual effective rate of 5%. the amount for amortization
marta [7]

The book value of the bond at the end of year 10 is 1,160

What is the basis for determining premium amortization?

The bond premium amortization is assumed to be determined using the straight-line basis such that bond premium amortized in each year is the same for 18 years of bond investment, in other words, the year 10 bond premium amortization of 20 is the same for all other years.

Total premium on bond issuance=20*18

total premium on bond issuance=360

bond price issued price=par value+ premium=1000+360=1360

As at the end of the 10th year, bond premium amortized thus far is 20 multiplied by 10 years

bond premium amortized=20*10=200

book value of the bond at the end of year 10=1360-200

book value of the bond at the end of year 10=1,160

Find out more about bond premium on:brainly.com/question/14814327

#SPJ1

3 0
1 year ago
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