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Papessa [141]
3 years ago
10

Company X just paid $1.95 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividend

s will be increasing by 4.3 percent. If you require a rate of return of 8.5 percent, how much are you willing to pay today to purchase one share of the company's stock
Business
1 answer:
Llana [10]3 years ago
3 0

Answer:

The fair price of stock today is $48.425 and that is the most one should be willing to pay today.

Explanation:

The company's dividend will grow at a constant rate of 4.3% which means that the constant growth model of Dividend Discount Model will be used to calculate the price of a stock today.

The formula for Constant growth model is,

P0 = D0 (1 + g) / r - g

Where,

  • D0 is dividend today
  • r is the required rate of return
  • g is the growth rate in dividend

P0 = 1.95 * (1+0.043) / 0.085 - 0.043

P0 = $48.425

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Lubbock county is planning to construct a bridge across the Rio de Lubbock to facilitate afternoon skiing in the El Dusto ski ba
Anarel [89]

Answer:

575,010.25

Explanation:

i = 5%. n = 20 Years. P = 6,500,000.

Annual Maintenance Cost for the first five years, A1 = 25,000.

Annual Maintenance Cost from year 6 thro' 15, A2 = 30,000.

Annual Maintenance Cost from year 16 thro' 20, A3 = 35,000.

Overhaul Costs = 500,000 at year 10.

EUAC = [6,500,000 + 500,000 (P/F, 5%, 10)] (A/P, 5%, 20) +

25,000 +[{5000 (F/A, 5%, 5) + 5000(F/A, 5%, 15)} (A/F, 5%, 20)]

= [6,500,000 + 500,000 (0.6139)] (0.0802) +

25,000 +[{5000 (5.526) + 5000 (21.579)}(0.0302)]

= 545,917.39 + 29,092.86 = 575,010.25

6 0
3 years ago
Complete the Analysis section using formulas with statistical functions. Use named ranges instead of cell references in the form
hram777 [196]

Answer:

The formula for average is =AVERAGE(E15,E16).

The formula for highest is =MAX(F15,F16).

The formula for lowest is =MIN(G15,G16).

Explanation:

In MS Excel, on the left hand side below the tool bar there is a small box which tells the cell name where the cursor is clicked, the name of the cell can be changed from here easily, click on the desired cell and then by clicking on the box you can enter the name of the cell. After a cell is renamed the formula can be written by simply putting the name of the cell instead of the original e.g. E13

The formula for average is =AVERAGE(E15,E16).

The formula for highest is =MAX(F15,F16).

The formula for lowest is =MIN(G15,G16).

The cells provided in the formula above is just an example and more than two cells can be selected.

5 0
3 years ago
Suppose your company needs $14 million to build a new assembly line. your target debt-equity ratio is 0.84. the flotation cost f
Leviafan [203]

Suppose your company needs $14 million to build a new assembly line. your target debt-equity ratio is 0.84. the flotation cost for new equity is 9.5 percent, but the floatation cost for debt is only 2.5 percent. The amount required to build a new assembly line = is $ 14 million.

Equity represents the price that could be lower back to an agency's shareholders if all of the property has been liquidated and all of the business enterprise's debts were paid off. We also can consider equity as a diploma of residual possession in a company or asset after subtracting all debts related to that asset.

Equity is the possession of any asset after any liabilities associated with the asset are cleared. for example, in case you very own a vehicle well worth $25,000, but you owe $10,000 on that car, the car represents $15,000 fairness. it is the price or interest of the maximum junior magnificence of investors in assets.

In conclusion, stocks are referred to as equities because they constitute possession in organizations. They permit buyers advantage from boom but also have a chance while enterprise conditions weaken. In the subsequent time, we'll explore the variations between shares and bonds.

Debt equity ratio (debt/equity) = 0.84/1

Therefore total assets = debt + equity = 0.84 + 1 = 1.84

Flotation Cost Percentage formula = Weight of debt x Floataion Cost of debt + Weight of equity x Floataion Cost of equity

= (0.84 / 1.84) 2.5% + (1/1.84)9.5%

= 1.1413% + 5.1630%

= 6.3043%

Amount to be raised to purchase building = Cost of building / ( 1 - Total Floatation Cost Percentage)

= 14/(1-6.3043%)

= 14/0.9370

= 14.94 million

Learn  more about equity here brainly.com/question/26507171

#SPJ4

3 0
1 year ago
Suppose Nippon Technology had the following results related to cash flows for 2020: Net Income of $8,400,000 Adjustments from Op
Flauer [41]

Answer:

$9,800,000

Explanation:

                Statement of Cash Flows (Indirect Method)

Particulars                                                                           Amount

Net income                                                                      $8,400,000

Add: Adjustment for operating activities                      -<u>$1,300,000</u>

Net cash flow from Operating Activities (I)                    $7,100,000

Add: Net Cash Flow from Investing Activities (II)         -$1,300,000

Add: Net Cash Flow from Financing Activities (III)        <u>$4,000,000</u>

Net Cash Flow (I+II+III)                                                   <u>$9,800,000</u>

4 0
3 years ago
Your grandmother has been putting $1,000 into a savings account on every birthday since your first (that is, when you turned one
lukranit [14]

Answer:

The amount in the account on the  18th birthday = $ 25,645.41

Explanation:

<em>The investment can be described as an ordinary annuity. An ordinary annuity is a series of equal periodic cash flows that  occur for a certain number of years</em>

<em>The amount the invest will accrue principal plus interest is known as the f</em><u><em>uture value</em></u><em> of the annuity</em>

It is determined as follows:

<em>FV = A ×  ( (1+r)^n -1  ) / r</em>

FV - ?,  A = 1000.  r - 4%- 0.04, n - 18

FV = 1,000× ( ( (1.04)^(18) - 1 )/ 0.04

    = 1,000 ×  25.64541288

    = $ 25,645.41

The amount in the account on the  18th birthday = $ 25,645.41

5 0
3 years ago
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