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
Elanso [62]
3 years ago
7

Suppose DeepMind Inc. will pay $1.50 per share in dividends next year. The require return on the stock is 10% and its dividends

will grow by 2% per year indefinitely. Under which of the following scenarios would you be willing to pay more than $18.75 today?A.All else being equal, the required return is more than 10%.B.All else being equal, the dividend next year will be $1.20.C.All else being equal, the growth rate of the dividends is greater than 2%.
Business
1 answer:
Brums [2.3K]3 years ago
3 0

Answer:

C. All else being equal, the growth rate of the dividends is greater than 2%

Explanation:

The formula to calculate the fair price of a stock with a constant growth in dividends is as follows,

  • P = D1 / r-g
  • Where D1 is the dividend next period
  • r is the required rate of return
  • g is the growth rate in dividends
  • P = 1.5 / 0.1 - 0.02 = 18.75
  • We are taking 1.5 as D1 as it is the dividend per share DeepMind will pay next year.

So, we will be willing to pay more than 18.75 if the fair price per share today is greater than 18.75. We check all the 3 options.

A. say the required rate is 10.1%

  • P = 1.5 / (0.101 - 0.02) = 18.52
  • So if the required rate of return increases from 10%, the fair price per share is falling and we will be willing to pay less than 18.75 per share.

B. P = 1.2 / (0.1 - 0.02) = 15

  • If D1 = 1.2,the fair price per share will be 15 which is less so we will not be willing to pay more than 15 for such share.

C. Say the growth rate in dividends is 2.1%

  • P = 1.5 / (0.1 - 0.021) = 18.99
  • The fair price per share increased to 18.99 if the growth rate in dividend increases by 0.1 percentage point. Thus, C is the correct answer

You might be interested in
Cups of coffee of milk tea are substitutes. assume both have in elastic demand. Suppose exceptionally good weather increases the
nata0808 [166]

Answer:

In that situation, the demand of the Milk tea will fall.

Explanation:

In businesses subtitles are the type of products that serve a similar purpose but generally less favorable. You use substitutes as a second product when you somehow cannot use the first/main product.

In the example above,

Let's say that Coffee is people's favorite beverages. They like it better than milk tea. But, if they don't have enough money to buy their favorite coffee, they sometimes have to exchange it and settle with milk tea.

When weather increases the harvest of the coffee bean crop, the price of coffee will most likely fall down due to the abundance in resource.

When this happen, there will be lesser people who use the substitute product. in the end, the demand for the milk tea will fall.

8 0
3 years ago
Under the uniform capitalization rules applicable to taxpayers with property acquired for resale, which of the following costs s
pashok25 [27]

Answer:

The correct answer is A

Explanation:

As per the UNICAP (stands for Uniform Capitalization) rules, the person have to capitalize the cost for creating the assets, which means or defines as to capitalize the raw materials, labor cost and other indirect as well as direct costs that is attributable to the production of the assets.

So, the costs which is to be capitalized in respect to inventory are the repacking cost, which is involved in the indirect supplies and other materials and the off site storage cost is involves in the rental of the facilities and equipment.

6 0
3 years ago
Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $95,000. The annual cash inflows for t
Citrus2011 [14]

Answer:

internal rate of return is 20.463%

Explanation:

given data

Year   Cash Flow

1         $48,000

2         $46,000

3          $41,000

equipment cost = $95,000

to find out

Determine the internal rate of return

solution

we consider here  internal rate of return  is x

so we can say present value of inflows = present value of outflows

equate here

$95000 = \frac{48000}{(x)} +\frac{46000}{(x)^2} +\frac{41000}{(x)^3}  

solve it we get

x = 20.463 %

so internal rate of return is 20.463%

5 0
4 years ago
A current emphasis in supply chain management is to make the process of ordering as simple as possible, often through electronic
Valentin [98]

Answer:

The correct answer is a. quick response and efficient consumer response delivery systems .

Explanation:

Rapid response systems, as the name implies, seeks to simplify the order process by making it as simple and fast as possible. This is of great importance to large store buyers who handle large volumes of inventory and require a quick response on availability and the time it would take for a new order to arrive to fill their shelves. Technology is important in this process because of its ability to generate data instantly, and because the transmission of information is done just a click away.

6 0
4 years ago
The proteins that exert the greatest colloid osmotic pressure to maintain blood volume and blood pressure are called.
lesya [120]

The proteins that exert the greatest colloid osmotic pressure to maintain blood volume and pressure are called: Serum Albumin.

<h3>What is Serum Albumin?</h3>

Serum Albumin is a form of protein that is located in blood plasma. It makes up about 55% of the proteins in blood plasma.

Serum albumin also exerts the greatest colloid osmotic pressure that amounts to 22 mm Hg. This figure is followed by the globulins that account for pressure of just 6 mm Hg.

Learn more about Serum Albumin here:

brainly.com/question/2456851

8 0
2 years ago
Other questions:
  • The following errors occurred in posting from a two-column journal:
    9·1 answer
  • Which would you trade on a stock exchange?<br> A) shares<br> B) bonds<br> C) annuities
    12·2 answers
  • makes handheld calculators in two​ models: basic and professional. estimated of manufacturing overhead and machine hours for the
    15·1 answer
  • What is the expected return on this stock given the following information?
    9·1 answer
  • What are five groups of people to whom business communication might write letters of appreciation?
    11·1 answer
  • The nurse is teaching a student nurse about Covey’s eight characteristics of effective leaders. Which statement of the student n
    7·1 answer
  • Which of the following requirements must be met for a redemption to be treated as substantially​ disproportionate? A. The shareh
    6·1 answer
  • QUESTION 1 _______________________ are economists who generally emphasize the importance of aggregate supply in determining the
    10·1 answer
  • Marketing to people based on their lifestyle is called
    9·1 answer
  • MediSecure Labs uses the weighted-average method in its process costing system. The following data are available for one departm
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!