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Sonbull [250]
3 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]3 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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Sheridan Company uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2019
gizmo_the_mogwai [7]

Answer:

$1,440 per machine

Explanation:

The computation of the cost per machine is shown below:

= Total cost ÷ number of machine completed

where,

Total cost = Material cost + direct labor cost + manufacturing overhead applied cost + beginning work in process cost - ending work in process cost

= $15,000 + $11,000 + $7,000 + $11,000 - $8,000

= $36,000

And, the number of machine completed is 25

So, the cost per machine is

= $36,000 ÷ 25 machines

= $1,440 per machine

4 0
2 years ago
From June 2008 oil was at a high of $144.78 per barrel. During the period from April 2011 until July of 2014, the price of oil h
In-s [12.5K]

Answer:

I don't even know big cuh

3 0
2 years ago
Describe the short run effects of each of the following socks on the aggregate price level and aggregate output. a. The governme
zhannawk [14.2K]

Answer:

The answer is

A: Aggregate price level increases and aggregate output decreases

B. Both aggregate price level aggregate output increases

C. Aggregate price level increases and aggregate output decreases

Explanation:

A. This government action will increase the aggregate price level increases due to inflation. Aggregate output will decrease due to the increase in cost of product (high wage to labor)

B. Because of the increased spending Investment in solar program, both aggregate output and aggregate price level increase.

C. Due to the severe weather destroyed crops, aggregate price level increases and aggregate output decreases. This happened because there will be decrease in supply of crops.

8 0
3 years ago
A __________ is a written document that details the business idea, the target market and the business's competitive advantage, f
Alina [70]

Answer:

business plan

Explanation:

A<u> business plan</u> is a written document that details the business idea, the target market and the business's competitive advantage, financial resources available for the business, and the qualification of the management.

7 0
3 years ago
Last year, you purchased a stock at a price of $60.00 a share. Over the course of the year, you received $2.90 per share in divi
zalisa [80]

Answer:

Real rate of return= 13.7%

Explanation:

<em>The return on investment is the sum of the dividends earned and capital gains made during the holding period of the investment. </em>

<em>Dividend is the proportion of the profit made by a company which is paid to shareholders.  </em>

<em>Capital gains is another type of the return made on an equity investment as a result of increase in the value of the shares. It is difference between the cost of the share and the value at the time of disposal. </em>

<em>Therefore, we can can compute the return on the investment as follows: </em>

The total return = (2.90) + (65.60-60)= 8.5

To determine the real return, we adjust the nominal return for the impact of inflation as follows:

Real total return ($) =  8.5/1.034=8.220

Total return in (%) = (8.220 /60)× 100= 13.7%

3 0
3 years ago
Read 2 more answers
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