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Murljashka [212]
3 years ago
14

Suppose a company currently pays an annual dividend of $6.00 on its common stock in a single annual installment and management p

lans on raising this dividend by 5 percent per year, indefinitely. If the required return on this stock is 14 percent, what is the current share price?
Business
2 answers:
Andrej [43]3 years ago
8 0

Answer:

The current share price is $70

Explanation:

The constant growth in dividend will require the Gordon Growth model. The formula for the price of stock can be written as,

P0 = D1 / r-g

Where,

  • D1 is the dividend expected next year
  • r is the required rate of return
  • g is the growth rate in dividends

P0 = 6*(1+0.05) / 0.14 - 0.05

P0 = $70 per share

NNADVOKAT [17]3 years ago
8 0

Answer:

The price of the current share is $70

Explanation:

Value of the stock:

The Value of the stock of the organization is the current estimation of its incomes limited at the profits required by the speculators.  

In the event that the profits of the organization are foreseen to develop at steady rate, at that point following equation can be utilized to esteem the stock:

P_{0} = D_{1} / r-g

Where,

P_{0}  = Current price of the stock

D_{1} = Next dividend expected,

r = Required return of investors

g = Constant growth rate

Thus, the current price of the company paying annual dividend can be calculated as:

P_{0} = D_{1} / r-g

P_{0} = 6 * (1 + 0.05) / 0.14 - 0.05

P_{0} = 70

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Montano1993 [528]

Answer:

A) the affordable method,

In Fine Fettle's management reviews what it is trying to achieve with promotion and sets the budget based on anticipated expenses.

B) the percentage-of-sales method,

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C) the competitive-parity method,

In Fine Fettle looks at its competitors and finds that their average promotional spending ranges from $100,000 to $250,000. Therefore, the promotional budget is set at $200,000.

D) the objective-and-task method.

In Fine Fettle's management reviews its revenues and expenses and allocates promotional spending based on what management believes it has to spend

Explanation:

A) is deciding the promotion expense considering how much can afford based on the expenses budget

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3 years ago
Henncom, a company that manufactures computer spare parts, runs its operations in a small office. Owing to the increase in the d
Leno4ka [110]

Answer:

Carl is most likely satisficing

Explanation:

For decision making, satisficing means "Examining alternatives until a practical (most obvious, attainable, and reasonable) solution with adequate level of acceptability is found, and stopping the search there instead of looking for the best-possible (optimum) solution."

Reference: WebFinance Inc. “What Is Satisficing? Definition and Meaning.” BusinessDictionary.com, 2019

8 0
2 years ago
The demand and supply functions for basic cable TV in the local market are given as: Calculate the consumer and producer surplus
lana [24]

Answer: Hello your question is poorly written attached below is the complete question

answer:

a) Cs = 800,000 ,  Ps = 1,500,000

b) Cs = 1437500,  Ps = 525,000

Explanation:

Demand function ( Qd ) = 200,000 - 4000 P

supply function ( Qs ) = 20,000 + 2000 P

at equilibrium :  200,000 - 4000P = 20,000 + 2000P

therefore ; P = 180,000 / 6000 = 30

Q = 20,000 + 2000 ( 30 ) = 80,000

<u>a) Determine consumer and producer surplus in the market</u>

consumer surplus ( Cs ) This is the area above the price and below the demand curve  = 1/2 * ( 50 - 30 ) 80,000 = 800,000

producer surplus ( Ps ) This is the area above supply and below price

= 30 * ( 80,000 ) -  1/2 (80,000 - 20,000 ) (30)

= 1,500,000

<u>b) Determine the new levels of consumer and producer surplus with a price ceiling of $15 </u>

Pc (ceiling price ) = $15

Qd = 200,000 - 4000 ( 15 )  = 140,000

Qs = 20,000 + 2000 ( 15 ) = 50,000

∴ New consumer surplus = area ( a , Pc, b, d )

= ( 30 - 15 ) (50,000) + 1/2(50-30) (80,000) - 1/2 (80,000 - 50,000 ) (37.5 - 30)

   = 1437500

New producer surplus = area ( Pc , b, e 0 )

= ( 15 ) ( 50000) - 1/2 ( 50,000 - 20,000 ) (15)

= 525,000

7 0
3 years ago
Can someone please help me with this journal prompt
Irina-Kira [14]

Answer: Go to Microsoft edge the new one and look it up

Explanation:

8 0
3 years ago
ADP reports the following income statement.
oee [108]

Answer:

Forecast of 2020 net earnings = $299.2 million.

Explanation:

Note:

a. See part a of the attached excel file for the calculations of the Historic Percent of Total Revenue.

b. See part b of the attached excel file for the Forecast of ADP’s 2020 income statement.

From part b of the attached excel file, we have:

Forecast of 2020 net earnings = $299.2 million.

Download xlsx
3 0
3 years ago
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