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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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Financial reporting by not-for-profit, nongovernmental entities should provide information useful in: a) Assessing management st
kari74 [83]

Answer:

D. All of the above

Explanation:

Financial reporting by not-for-profit, nongovernmental entities should provide information useful in Assessing management stewardship and performance, Assessing services and the ability to continue to providing services, Making resource allocation decisions.

4 0
2 years ago
Read 2 more answers
NoGrowth Industries presently pays an annual dividend of $ 1.50 per share and it is expected that these dividend payments will c
enyata [817]

Answer:

$12.5

Explanation:

Given that,

Annual dividend paid = $1.50 per share

Equity cost of capital = 12​%

The value of a share of​ NoGrowth's stock is determined by dividing the annual dividend paid by the equity cost of capital of the firm.

Value of share:

= Annual dividend paid ÷ Equity cost of capital

= $1.50 per share ÷ 0.12

= $12.5

Therefore, the value of a share of​ NoGrowth's stock is closest​ to $12.50.

4 0
3 years ago
You are an owner of a car wash, and you meet with other neighborhood car wash owners. Consider that trips through the car wash a
exis [7]

Answer:A ,E and F

Explanation:

6 0
3 years ago
True or false Historically, unions were considered to be conspiracies against businesses and were prosecuted in the courts.
Blizzard [7]
That statement is true

union could greatly damage a business reputation and productivity. The competition's of a business could be the one that form the union and try to sabotage that business
8 0
3 years ago
If you expect the target firm to grow at your calculated annual growth rate for the next four years (2021- 2024) and then beyond
frez [133]

Answer:

The question is incomplete, so I looked for a similar one:

FCF 2018 = ($4,923,478 - $1,033,930 + $605,752) - ($2,173,000 + $605,752) - ($8,501,348 - $7,600,543) = $4,495,300 - $2,778,752 - $900,805 = $815,743

FCF 2019 = ($5,960,124 - $1,251,626 + $1,239,239) - ($2,580,000 + $1,239,239) - ($7,210,800 - $5,905,791) = $5,947,737 - $3,819,239 - $1,305,009 = $823,849

FCF 2020 = ($5,998,321 - $1,259,647 + $239,895) - ($1,903,500 + $239,895) - ($5,975,324 - $4,116,364) = $4,978,569 - $2,143,395 - $1,858,960= $976,214

average annual growth rate 2018 - 2020 = {[(823,849 - 815,743)/815,743] + [(976,214 - 823,849)/823,849]} / 2 = (0.99% + 18.49%) / 2 = 9.74%

FCF 2021 = $976,214 x 1.0974 = $1,071,297

FCF 2022 = $1,071,297 x 1.0974 = $1,175,642

FCF 2023 = $1,175,642 x 1.02 = $1,199,154

first we must calculate the terminal value in 2022 = $1,199,154 / (10.5% - 2%) = $14,107,699

the firm's current value = $1,071,297/1.105 + $1,175,642/1.105² + $14,107,699/1.105² = $13,486,312

7 0
3 years ago
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