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boyakko [2]
3 years ago
9

stock currently sells for $35.25 per share. The dividend is projected to increase at a constant rate of 4.75% per year. The requ

ired rate of return on the stock, rs, is 11.50%. What is the stock's expected price 5 years from now?
Business
1 answer:
USPshnik [31]3 years ago
6 0

Answer:

The stock price 5 years from now will be 44.46

Explanation:

The stock price will increase like  compound interest at the same rate as the dividends.

Stock(1+ g)^{time} = Amount

Stock 35.25

time 5

dividend grow rate 0.0475

35.25 (1+ 0.0475)^{5} = Amount

Amount 44.45588696

The stock price 5 years from now will be 44.46

<u>Reasoning:</u>

In five years, if we calcualte the gordon dividend growth model:

\frac{divends_{year5}}{return-growth} = Intrinsic \: Value

and year 5 dividends would be:

Dividend\: (1+ g)^{5} = Divends_{year5}

\frac{Dividend\: (1+ g)^{5}}{return-growth} = Intrinsic \: Value

we can arrange the formula like this:

\frac{Dividend}{return-growth} \times (1+ g)^{5}= Intrinsic \: Value

The first part is the current stock price so our formula is confirmed.

$Market Value Today \times (1+ g)^{5}= Intrinsic \: Value

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Two employers pay a wage of $10 an hour. Employer A is a monopsony while Employer B hires in a competitive labor market. Both fi
defon

Answer:

It will cost employer A more to hire another worker

5 0
3 years ago
Assuming P≥0, suppose that a population develops according to the logistic equation ????P/????????=0.07P−0.00014P2 where ???? is
Natasha2012 [34]

Answer:

A complete description of the problem and solutions to each point are given below.

Explanation:

The Logistic Growth model of a population is defined as follows:

                                   dP/dt = kP (1 - P/M) (1)

Where:

dP/dt is the population growth rate.

k is the maximal individual growth rate for a given population

P is the number of individual in the population

M= carrying capacity of the population.

In the problem this first order derivative ecuation is given by

                               dP/dt= 0,07P - 0,00014P² (2)

So, we can factorize ecuation (1) and compare it with (2) to find the carryng capacity and k value (questions 1 and 2).

                                        kP (1 - P/M) = 0,07P - 0,00014P²

                                        kP - (k/M)P² = 0,07P - 0,00014P²

Here kP = 0,07P ⇒ k = 0,07 (answer to question 2)

Then, (k/M)P² = 0,00014P²⇒ (k/M) = 0,00014 and given that k= 0,07

⇒ 0,07/M = 0,00014 ⇒ M = 0,07/0,00014 ⇒ M=500 (answer to question 1)

Finally to find for which values of P is the population increasing/decreasing, we have to find the values at which dP/dt is zero. Analyzing the equation as a quadratic function (applying Baskara´s equation) we find that the values at which dP/dt is zero are P= 0 and P = -1.

x = [-0,07 ± √(0,07²)]/ 0,14 ⇒ x=  [-0,07 ± 0,07)]/ 0,14 ⇒ x = 0 and x= -1.

Then the vertex here is P = -0,5.

Now we can state that for P greater than - 0,5 the population is decreasimg (question 4), while for values from -∞ to - 0,5 the population is increasing (question 3).

Summarizing, given the first order derivative, the carrying capacity of the population is 500, the value of k is 0,07, the values of P for which dP/dt is positive (incresing population) are those comprised in the range (-∞, -0,5) and those for which the population is decreasing are (-0,5,∞).

3 0
3 years ago
In 2017, judges continue to exercise a powerful influence over the contents of employment contracts by their use of implied term
tino4ka555 [31]
Employment contracts will sometimes need contractual terms to be implied into them to make them workable and fill gaps where nothing was agreed between the employer and employee
6 0
2 years ago
The risk-free rate of return is 6%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporat
Doss [256]

Answer:

(i) $26.49375

(ii) $29.11

(iii) 52.54%

Explanation:

Required rate of return using CAPM model:

= risk free rate + beta (expected return - risk free rate)

= 0.06 + 2.3 (0.15 - 0.06)

= 0.267 or 26.7%

Growth rate = (1 - dividend payout ratio) × ROE

                    = (1 - 0.45) × 0.18

                    = 0.099 or 9.9%

a)

Dividends per share will be $4.05 since payout ratio is 45%

Intrinsic value of share = D1 ÷ (Rate - growth)

                                      = 4.05(1.099) ÷ (0.267 - 0.099)

                                      = 4.45095 ÷ 0.168

                                      = $26.49375

b)

Price after 1 year = 26.49( 1 + 0.099)

Price after 1 year = $29.11

c)

One year holding period return = ( $29.11 + 4.45 - 22) ÷ 22

                                                     = 0.5254 or 52.54%

7 0
2 years ago
Journal entry for purchased goods from ABC Co. for Rs. 11,000.​
vladimir1956 [14]

Answer:

purchase A/c. Dr. Rs.11,000

To ABC CO.A/c. Rs.11,000

(being goods purchased in cash)

3 0
2 years ago
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