1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Dima020 [189]
3 years ago
15

An investor buys 100 shares of a $40 stock that pays an annual cash dividend of $2 a share (a 5 percent dividend yield) and sign

s up for the dividend reinvestment plan.
a. If neither the dividend nor the price changes, how many shares will the investor have at the end of ten years? How much will the position in the stock be worth?
b. if the price of the stock rises by 6% annually, but the dividend remains at $2, how many total shares does the investor end up with at the end of year 10?
c. If the price of the stock rises by 6 percent annually but the dividend rises by only 3 percent annually, how many shares are purchased each year for the next ten years? How much is the total position worth at the end of ten years? Since dividend plans credit fractional shares, use three decimal places in parts (b) and (c)
Business
1 answer:
cricket20 [7]3 years ago
6 0

Answer:

a= 163 shares worth 6,515.58 dollars

b= It purchase 43.5 shares

giving a total of 143.5 shares worth 71.634 each giving a net worth of $10,280.33861

c=  It purchase 50.3 shares

giving a total of 150.3 shares worth 71.634 each giving a net worth of $10.766.88

Explanation:

We increase at 5% rate each year.

Principal \: (1+ r)^{time} = Amount

Principal 4,000.00 (100 shares x $40 each

time 10.00

rate 0.05000

4000 \: (1+ 0.05)^{10} = Amount

Amount 6,515.58

Total shares after 10 years

6,515.58 / 40 = 162.8894627 = 163

If the price rise at 6% but dividends remains constant

Shares Dividends  // Price // Shares purchased

1 100         200     42.4         4.717

2 104.717 209.434     44.944 4.66

3 109.377 218.754     47.641   4.592

4 113.969 227.938     50.5      4.514

5 118.483 236.966     53.53   4.427

6 122.91 245.82     56.741         4.333

7 127.243 254.486     60.146 4.232

8 131.475 262.95     63.754 4.125

9 135.6 271.2     67.58   4.014

10 139.614 279.228     71.634  3.898

TOTAL143.512                                 43.512

c)

\left[\begin{array}{ccccc}$Years&$Shares&$Dividends&$Price&$Shares purchased\\1&100&200&42.4&4.717\\2&104.717&215.718&44.944&4.8\\3&109.517&232.374&47.641&4.878\\4&114.395&250.006&50.5&4.951\\5&119.346&268.65&53.53&5.019\\6&124.365&288.347&56.741&5.082\\7&129.447&309.133&60.146&5.14\\8&134.587&331.051&63.754&5.193\\9&139.78&354.139&67.58&5.241\\10&145.021&378.44&71.634&5.283\\TOTAL&150.304\\\end{array}\right]

150.304 x 71.634 = 10766.87674

You might be interested in
In a fixed exchange rate system, how do countries address the problem of currency market pressures that threaten to lower or rai
Xelga [282]

Answer:

If demand falls, then countries must increase demand by buying excess supply with national currency ; If demand increases, countries must meet the excess demand for foreign exchange by selling their reserves.

Explanation:

The first analyzes we know about demand are those related to price fluctuations and the quantity of products or services in a given market, leading to changes in demand depending on the type of market competition, which leads us to consider the potential market, consumption level and distribution of family spending. This is where the opinion of the Marketing analyst becomes important, which should ask the following questions: How many people can buy our product? If the researcher tries to obtain a skateboard market potential, it is essential to investigate the number of births in the given period.

Just as the money supply is constituted by the total amount of money that exists in an economy, which is closely related to liquidity, as a consumer buying instrument. The so-called Total Monetary Demand arises, “the function that expresses the amount of wealth that people and companies keep in the form of money” and that at the time of consuming it is transformed into units of units of a good or service that consumers want Acquire at a specific time.

7 0
2 years ago
In a CVP income statement, cost of goods sold is generally:
Nadya [2.5K]

Answer:

d) partly a variable cost and partly a fixed cost.

Explanation:

CVP income statement is also known as cost volume profit income statement, it is generally a product of CVP analysis and it include five elements:

  • Price of products.
  • Volume of activity.
  • Variable cost per unit.
  • Total fixed cost.
  • Mix of product sold.

CVP analysis are conducted to know how changes in cost and volume would impact company´s operating income and net income. It require all the cost of company should be segregated into variable and fixed cost. It also calculate contribution margin, which help to identify the profit of company before deducting fixed cost.

3 0
3 years ago
The Canon Corporation sells ten copiers to the Title Company on October 15 for $40,000. Canon delivers the copiers to Title on O
elena-14-01-66 [18.8K]

Answer:

$0

Explanation:

In this method, the transaction reporting will be performed on an accrual basis which means whether or not the payment is paid but it is reported in the account books.

Once the expenditure is incurred or the revenues is earned the same is to be recorded in the books of accounts whether cash paid or not and in case of revenues whether cash received or not

In the given case, the Canon corporation sells on October 15 so it would be recorded on October itself .

Therefore, no revenue would be recognized on the month of November

3 0
2 years ago
Tina's Track Supply's market-to-book ratio is currently 4.5 times and PE ratio is 10.5 times. If Tina's Track Supply's common st
otez555 [7]

Answer:

$22.2222, $9.5238, respectively

Explanation:

The market-to-book ratio is given by a share's market value divided by its book value, if shares are selling for $100 on the market, the book value is:

B = \frac{\$100}{4.5}=\$22.2222

The price to earnings ratio (PE ratio) is determined as a share's price divided by the earnings per share. Earnings per share are:

E=\frac{\$100}{10.5}\\E=\$9.5238

The book value per share and earnings per share are $22.2222, $9.5238, respectively

5 0
3 years ago
Which activity relates to judging the seriousness or gravity of a given problem?
lana [24]

Answer: Evaluation

Explanation:

3 0
2 years ago
Other questions:
  • Which situation exemplifies public action?
    8·1 answer
  • Registration in Ms. McNick's classes reaches maximum enrollment quickly. Students register immediately online just to insure the
    13·1 answer
  • Where can I get help for AS Accounting?
    9·1 answer
  • Ramort Company reports the following cost data for its single product. The company regularly sells 20,000 units of its product a
    6·1 answer
  • Annabelle owns an Italian ice shop. If she decided to expand the size of her shop so that she could sell more Italian ices, how
    8·1 answer
  • Higado Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by sto
    5·1 answer
  • Read the following scenario and select the appropriate shifter of demand (what is going to shift the curve) It becomes known tha
    14·1 answer
  • Clemente Santiago has formed a business that sells carved gourmet coconuts. He has hired five employees. The most senior is Mary
    13·1 answer
  • Which of the following is an example of a mixed cost?
    7·1 answer
  • uppose the government wants to limit imports of a certain good. Is it preferable to use an import quota or a​ tariff? Why? A.
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!