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
butalik [34]
4 years ago
8

Could I Industries just paid a dividend of $1.62 per share. The dividends are expected to grow at a rate of 20 percent for the n

ext four years and then level off to a growth rate of 4 percent indefinitely. If the required return is 12 percent, what is the value of the stock today
Business
1 answer:
nata0808 [166]4 years ago
4 0

Answer:

Explanation:

Using the dividend growth model = Do(1+g)/Ke-g

Do=1.62$

G=4%

Ke=12%

Do(1+g)/Ke-g  =  2.0736(1+4%)/12%-4%

                      =   1.6848

/8%

                      =   53.916

                 Year Year Year Year Year  

                    0             1             2           3            4  

                          20%  20%  20% 20%  

Dividend             1        1.2      1.44  1.728 2.0736  

Ifninty dividend                                               55.91*  

Total Cashflows 1    1.2     1.44         1.728 55.98  

Pres.Val @12%    1     1.07142 1.14795  1.22995   35.583

     

Value of stock 40.030    

You might be interested in
In 2019, Pine Corporation had losses of $20,000 from operations. It received $180,000 in dividends from a 25%-owned domestic cor
zubka84 [21]

Answer:

Consider the following calculations

Explanation:

Net income per books   $65,000

Add back:

Federal income taxes     9,700

Excess contributions       3,000

Life insurance premiums 10,000

$87,700

Subtract:

Tax-exempt interest       (1,500)

Excess depreciation       (4,500)

Taxable income                         $81,700

Dividend received deduction = 160000 x 80% = 128000 (full DRD doesn't create loss).

DRD will be 80% of taxable inome because percent partnership is 25% which is between 20 to 80%.

7 0
3 years ago
The owner of Crackers, Inc., produces two kinds of crackers: Deluxe (D) and Classic (C). She has a limited amount of the three i
yulyashka [42]
It’s A because if u multiple the ounces and add them together the make less then 4,800
4 0
4 years ago
Albert joined a limited partnership with an investment of $10,000 for his interest. There were nine other limited partners who i
KIM [24]

Answer:

Albert will not have unlimited liability for either of those transactions since he is a limited partner.

4 0
4 years ago
Based on the concept of service blueprinting, what is the "line of visibility?" select one:
Katena32 [7]

The "line of visibility?" is:

c. a metaphoric divide between the parts of a service that a guest sees and what they do not see.

It basically is a line that separates front stage and back stage actions.

3 0
3 years ago
What is money measurement concept​
Mashutka [201]

like budgeting maybe I think

Explanation:

counting money determined by what u can spend vs what u can't

7 0
3 years ago
Other questions:
  • Jackson is the managing director of a company that manufactures toys. One of its toys had to be recalled because some consumers
    12·2 answers
  • A business firm's interaction with the environment is a characteristic of an open system true or false
    7·1 answer
  • The Dodd-Frank Act removed which group from decisions regarding the presidents of Federal Reserve Banks?
    10·1 answer
  • In spring 2012, Mainline Engineering Company signed an $80 million contract with the city of Duluth, to construct a new city hal
    13·1 answer
  • What is it called when people assume you're a certain way, and you act the part?
    6·1 answer
  • Suppose that you are the CFO of ABC Inc., which is an all-equity firm whose beta is 0.5. You are considering a new project that
    8·1 answer
  • Colin McKinney, director of marketing for Greenwald Industrial Products, complains to his advertising director that the continui
    5·1 answer
  • Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases
    15·1 answer
  • Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $154,000.
    14·1 answer
  • According to the bond-yield-plus-risk-premium approach, a firm's cost of retained earnings, r s , can be estimated by adding a r
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!