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
artcher [175]
3 years ago
9

The next dividend payment by Hoffman, Inc., will be $2.65 per share. The dividends are anticipated to maintain a growth rate of

4.5 percent forever. If the stock currently sells for $43.15 per share, what is the required return
Business
1 answer:
-Dominant- [34]3 years ago
5 0

Answer: 6.42%

Explanation:

To calculate this, we use the formula for the Dividend Discount Model/ Gordon Growth Formula as follows:

P = D1/(r - g)

Where,

P = current stock price

D1 = Next dividend

r = required return

g = growth rate

We can make r the subject of the equation by,

P = D1/(r - g)

P(r - g) = D1

r - g = D1/P

r = D1/P + g

Calculating therefore we have,

r = 2.65/43.15 + 0.045

= 0.06417728852

= 6.42%

6.42% is the required return.

If you need any clarification do comment.

You might be interested in
Sam has contracted with dave to purchase dave's racing bike, with payment and delivery of the bicycle to be in 10 days. three da
GaryK [48]
He should remind Dave about the racing bike purchase contract if he really wants the bike. The action can be done if there was a binding clause in the contract which binds Sam as the only buyer. Sam has a better option which is to sell the contract to Gene with a price higher than the first price but lower than the last price in order to gain a return from the bike purchase contract.
7 0
3 years ago
Name 3 career paths trade schools offer.
Ne4ueva [31]
School nurse
Lunch lady and
Teachers
5 0
2 years ago
What is the economic term used for sustained increase in the price of goods and services
Shkiper50 [21]

Answer:

Inflation

Explanation:

Inflation refers to a situation of a general increase in the prices of goods and services in the economy. As prices of goods and services rise, the cost of living goes up. Inflation results in the purchasing power of currency to diminish.    

Economist uses the consumer prices index to determine the rate of inflation. Inflation means a basket of goods and services will cost more today than it did in the prior period. Rapid economic growth that results in too much money in circulation causes inflation.

3 0
3 years ago
Many store brands use packaging and labeling that is similar to the more expensive national brand. The hope is that the look-ali
olga nikolaevna [1]

Answer:

Stimulus generalization

Explanation:

Stimulus generalization defines that it is the process of call up for a reason by giving responses. For example we call dog by using the bell so that dog can come for food.

Therefore according to the given situation, Many store brands use similar packaging and labeling to the more expensive big company. The idea is that in customers, the look-alike kit would evoke a similar reaction that allows them to buy the affordable store brand so this is an example of Stimulus generalization

6 0
3 years ago
Which one of the following statements concerning venture capital financing is incorrect? Multiple Choice Venture capitalists des
ziro4ka [17]

Answer:

The incorrect statement about Venture capitalists is:

Venture capitalists usually assume active roles in the management of the financed firm.

Explanation:

Venture capitalists are high net worth individuals with managerial competence or experience seeking for new businesses to invest in. In exchange, they ask for an equity stake in the company they finance.

Venture capital financing is the type of funds that are given to invested into viable businesses in their budding stage by investors that see long term growth potential in them. it is a form of private equity.

Venture Capitalist never assume active roles in the management of the financed firm. however, if they have the technical know how, they may pitch in passively from time to time to advice.

3 0
3 years ago
Other questions:
  • Drag the tiles to the correct boxes to complete the pairs.
    14·1 answer
  • The budget that estimates a firm's projected cash inflows and outflows, as well as cash shortages or surpluses during a given ti
    5·1 answer
  • _ occur(s) in large companies that have excess resources such as equipment and employees. Organizational slack Unlimited boundar
    7·1 answer
  • The _[blank]_ and _[blank]_ work to create spaces that are better for the environment as well as healthier for people.
    8·1 answer
  • Superstores that are actually giant specialty stores and have seen tremendous growth recently are called​ _______.
    5·1 answer
  • Who would certify the interoperability performance of a command and control system used by both the Army and the Navy?
    13·1 answer
  • During the swing era, economically speaking, American labor industries increasingly turned to _______ and ______ to make the eco
    5·1 answer
  • Each sole proprietor that applies for initial registration in a State as either a broker-dealer or investment adviser must file:
    10·1 answer
  • How many courses do you need to finish a major?
    14·1 answer
  • When the selling prices of all products at the split-off point are unavailable, the ________ is the best alternative for allocat
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!