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Natalka [10]
3 years ago
13

Crystal Glass recently paid $3.60 as an annual dividend. Future dividends are projected at $3.80, $4.10, and $4.25 over the next

three years, respectively. Beginning four years from now, the dividend is expected to increase by 3 percent annually. What is one share of this stock worth to you today if you require a 12.5 percent rate of return on similar investments?
Business
1 answer:
lora16 [44]3 years ago
6 0

Answer:

$41.96

Explanation:

The first thing you need to do is to calculate terminal value at the end of time t = 3. Then the intrinsic value of the stock is sum of discounted cashflow from t =1 to t = 3 (cashflows at t = 3 includes dividend as well as terminal value).

Terminal value at t = 3 = Dividend in year 4/(Required rate of return - Dividend growth)

                                     = 4.25 x (1 + 3%)/(12.5% - 3%)

                                     = 46.08

Then value of the stock is calculated as below:

Stock intrinsic value = 3.8/(1 + 12.5%) + 4.1/(1 + 12.5%)^2 + (4.25 + 46.08)/(1 + 12.5%)^3

                                  = 41.96

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Market researchers often report discretionary income. Discretionary income is your disposable income minus your fixed expenses.
SOVA2 [1]

The percentage of the disposable income that is discretionary is equal to 30.82% if the amount left after fixed expenses is $900.

As the amount left after payment of the fixed expenses is $900, this is said to be the discretionary income because discretionary income is equal to the disposable income minus fixed expenses.

Now we can calculate the percentage of disposable income that is discretionary as follows;

percentage of disposable income that is discretionary = (discretionary income ÷ disposable income) × 100

% discretionary income = (900 ÷ 2,920) × 100

% discretionary income = 90,000 ÷ 2,920

% discretionary income = 30.82%

Hence, 30.82% of the disposable income is calculated to be discretionary if the disposable income is $2,920 and the amount left after payment of fixed expenses is $900.

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3 0
1 year ago
The assertion that "There is no free lunch" means that:
kati45 [8]

Answer:

The correct answer is option B.

Explanation:

The statement "There is no free lunch" means that no product is made for free. Production of any good or service requires resources. These resources are scarce and have alternative uses. So in order to produce any goods or services limited resources are used and its alternative uses are sacrificed.

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3 years ago
Explain how test-marketing can increase profits.
kirill [66]

Answer:

Test marketing holds a lot of importance for the company. It allows

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Through this, the company can measure the performance of the

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Explanation:

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3 years ago
Identifying Which of the tiles you placed in the pure
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Pure competition simply means a market that's has a wide range of competitors who are selling the same products.

Your information is incomplete. Therefore, an overview of pure competition will be given. In pure competition, all the companies sell identical products.

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