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il63 [147K]
3 years ago
5

Item 4Item 4 You’ve collected the following information from your favorite financial website. 52-Week Price Stock (Div) Div Yld

% PE Ratio Close Price Net Chg Hi Lo 64.60 47.80 Abbott 1.12 1.9 235.6 62.91 −.05 145.94 70.28 Ralph Lauren 2.50 1.8 70.9 139.71 .62 171.13 139.13 IBM 6.30 4.3 23.8 145.39 .19 91.80 71.96 Duke Energy 3.56 4.9 17.6 74.30 .84 113.19 96.20 Disney 1.68 1.7 15.5 ?.10 According to your research, the growth rate in dividends for IBM for the next 5 years is expected to be 5 percent. Suppose IBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 3.5 percent indefinitely. Assume investors require a return of 10 percent on IBM stock.
Business
1 answer:
Leona [35]3 years ago
7 0

Answer:

P₀ = $106.96

Explanation:

the current dividend paid by IBM was $6.30 per stock

Div₀ = $6.30

Div₁ = $6.615

Div₂ = $6.94575

Div₃ = $7.2930375

Div₄ = $7.657689375

Div₅ = $8.040573844

Div₆ = $8.321993928

we must first determine the terminal value at year 5 = Div₆ / (rrr - g) = $8.321993928 / (10% - 3.5%) = $128.0306758

now we must discount the future values using the 10% discount rate:

P₀ = $6.615/1.1 + $6.94575/1.1² + $7.2930375/1.1³ + $7.657689375/1.1⁴ + $8.040573844/1.1⁵ + $128.0306758/1.1⁵ = $6.013 + $5.740 + $5.479 + $5.230 + $4.993 + $79.50 = $106.96

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2 years ago
Statement on Standards for Tax Services No. 1 establishes as a basic principle of providing tax services that the CPA:
Aleksandr-060686 [28]

Answer:

c. Must have a good faith belief that the tax return position has a realistic possibility of success if challenged by the IRS

Explanation:

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therefore

option c is correct

c. Must have a good faith belief that the tax return position has a realistic possibility of success if challenged by the IRS

7 0
3 years ago
Swifty Company's accounting records show the following at the year ending on December 31, 2022: Purchase Discounts $ 11300 Freig
Juli2301 [7.4K]

Cost of goods sold (Periodic System) = Beginning inventory + (Purchases, net of returns and allowances, and purchase discounts) + freight in − Ending inventory .

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The total sum that your company spent on expenses directly associated with the selling of goods is known as the cost of goods sold. Depending on the nature of your firm, this could also include raw materials, packaging, direct labor involved in making or selling the product, and items bought for resale.

First In First Out (FIFO), Last In First Out (LIFO), and the Average Cost Method are the three techniques that a business might employ when tracking the amount of inventory sold over a given time period.

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7 0
2 years ago
True or False Question
Len [333]

Answer:

true

Explanation:

jhonny sins approved this message

3 0
2 years ago
Read 2 more answers
With a​ downward-sloping demand​ curve, average revenue is equal to price A. because the firm must lower its price to sell addit
tia_tia [17]

Answer:

D. ​Actually, average revenue is always equal to​ price, whether demand is downward sloping or no

Explanation:

This is because Average revenue is the amount of revenue that is obtained by selling an addition unit of output. This additional revenue is always = Price as proven by the equation below,

Total Revenue = Price * Quantity

Thus, AR = Total Revenue / Quantity  

Input elements of the Total revenue we get,

AR = Price * Quantity / Quantity

AR = Price  

Hope that helps.

3 0
3 years ago
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