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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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At the beginning of Year 1, a company reported a balance in common stock of $166,000 and a balance in retained earnings of $66,0
Vinil7 [7]

Answer:

Explanation:

1.

Shareholders equity = Common stock + Retained earnings

Beg. balance = Common stock+Retained earnings = 166,000 + 66,000 = 232,000

Statement of shareholder's equity

Beg balance 232,000

Issuance of common stock  56,000

Add: Net Income 46,000

Less: Dividends 11,600

End balance 322,400

Balance sheet

There is not information for preparation of balance sheet but following is the layout:

Assets:

Cash

Supplies

Prepaid rent

Land

Liabilities:

Accounts payable

Salaries

Utilities

Notes payable

Stockholder's equity:

Common stock 222,000 [166,000+56,000]

Retained earnings 112,000 [66,000+46,000]

Total 334,000

6 0
2 years ago
Variable costs are Group of answer choices
Alex

Answer:

B) costs that change with the level of production.

Explanation:

Variable costs are costs that change according to the total production output.

The two main cost components in the production process are fixed costs, which remain to be paid even if the firm shuts down temporarily, and variable costs, which are subject to change according to the level of production.

Therefore, the answer is alternative B)

4 0
3 years ago
A hair stylist receives $6,000 per month from her clients as payment for her services. Each month she buys $1,000 worth of suppl
erica [24]
$7,000

She is paid $6k and pays out $1k per month. GDP is a measure of money flowing through an economy.
8 0
2 years ago
Income Summary has a credit balance of $12,000 after closing revenues and expenses. The entry to close Income Summary is credit
Reptile [31]

Answer:

debit Income Summary $12,000; credit Retained Earnings $12,000.

Explanation:

Based on the information given The entry to close Income Summary is:

Debit Income Summary $12,000

Credit Retained Earnings $12,000

(To close Income Summary)

6 0
3 years ago
Case 6-2 Bryan has just started an internship in which he uses a database frequently. The database contains information about th
Viktor [21]

Answer: Database File

Explanation:

From the given case/scenario , we can state that Bryan needs to create <em>database file. </em>Database files tends to store the data and information, at times usually it is stored in series of several tables, field the data values and table field. The data and information is then further organized and stored in accordance to data model.

7 0
3 years ago
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