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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.

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  • Franchising is simply known to be a type of contractual system. It is often used to commercialize products, services or technology.

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2 years ago
On April 1, 2014, Prince Company assigns $500,000 of its accounts receivable to the Third National Bank as collateral for a $300
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Answer:

Explanation:

The journal entries are shown below:

a) April 1, 2012;

Dr Cash A/C. $290,000

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Cr payable $300,000

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b)

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Cr Account receivable $350,000

c)

Dr payable $300,000

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Cr Cash $307,500

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Which economic system has no government involvement in the market? a. capitalism b. communism c. socialism d. No economic system
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1 year ago
Refer to the amortization tables in your slides. If the beginning balance of the bond (issued at a discount) is $885.30, the cas
slega [8]

Answer:

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Explanation:

According to the scenario, the given data are as follows:

Beginning balance = $885.30

cash payment = $50

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We can calculate the amortization amount by using following formula:

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= 885.30 x 6%

= $53.12

By putting the value, we get

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And,  Ending balance of bond = Beginning balance of bond + Amortization amount

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