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Dominik [7]
3 years ago
15

Quantitative Problem 1: Hubbard Industries just paid a common dividend, D0, of $1.30. It expects to grow at a constant rate of 2

% per year. If investors require a 10% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent.
Business
1 answer:
blondinia [14]3 years ago
6 0

Answer:

Current price is equal to $16.575

Explanation:

It is given common dividend D_0=1.30

Growth rate = 2% = 0.02

Required rate of return = 10% = 0.1

Dividend paid in next year

D_1=D_0(1+g)=1.30\times 1.02=1.326

Current price is given by P_0=\frac{D_1}{R_e-g}

P_0=\frac{1.326}{0.1-0.02}=16.575

Therefore current price is equal to $16.575

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Answer:

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2 years ago
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3 0
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The All-Star Basic Value Fund's portfolio is valued at $250 million. The fund has liabilities of $23 million, and the fund’s net
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$13.27 is the fund's number of shares outstanding

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