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
just olya [345]
3 years ago
11

What is the stock price per share for a stock that has a required return of 12%, an expected annual dividend of $3.15 per share

in the first year, and a constant (sustainable) growth rate of dividends of 8%
Business
1 answer:
Simora [160]3 years ago
5 0

Answer:

Price per share = $78.75

Explanation:

<em>The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.</em>

If dividend is expected to grow at a given rate , the value of a share is calculated using the formula below:

Price=Do (1+g)/(k-g)  

Where Do- Dividend now, g- growth rate, k- required rate of return(cost of equity)

<em>Note Do (1+g) represents the expected dividend in the first year</em>

DATA:

Do (1+g) = 3.15

g= 8%

k= 12%

Price per share = 3.15/(0.12- 0.08) = $78.75

Price per share = $78.75

You might be interested in
Which of the following about writing and revising business documents is most accurate? a. Experienced business writers rarely ne
Yanka [14]
C. Revising is always required or at least advised
4 0
2 years ago
Summit Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would
ladessa [460]

Answer:

b.$ 66

Explanation:

The question requires that Summit requires a return on sales of 25 %. To achieve that the cost of goods sold should be 75 %.

if the revised selling price is                                         $ 88

the target cost price would be ( $ 88 * 75 %)              % 66                

7 0
3 years ago
Change from the fair value method to the equity method Assume an investor company acquires for $256,000 an 8% investment in the
matrenka [14]

Answer:

Date         Account title and explanation      Debit        Credit

March 1    Equity investment                          $32,000

                ($612,000/17%)*8% - $256,000)

                       Unrealized holding gain                             $32,000

               (To adjust the value of equity investment)

Note: On 1 march, value of the investment value is increased which is unrealized based on 31 December fair value

6 0
3 years ago
One of two office clerks in a small company prepares a sales invoice for $4,300; however, the invoice is incorrectly entered by
KIM [24]

Answer: <u><em>C. Using predetermined totals to control posting routines.</em></u>

Explanation:  A regulation total if developed for the agreement to be posted, then it should be set side by side with total of items posted to personal accounts. Therefore, The most adequate way to avert this kind of error is by applying predetermined totals to control stating the daily cycle.

<u><em>Therefore, the correct option in this case is (c)</em></u>

4 0
3 years ago
Underline all of the following costs that are included in the cost of land.
Vladimir [108]

Answer:

a) Removal of unwanted buildings

d) Brokerage commission

e) Survey fees and legal fees

f) Purchase price

4 0
3 years ago
Other questions:
  • In your role as production planner, you have experienced too many stock outs on one particular item. This item has 348 pints of
    14·1 answer
  • Economic growth is __________.
    7·1 answer
  • Consider a file whose size varies between 4 kb and 4 mb during its lifetime. which of the three allocation schemes (contiguous,
    13·1 answer
  • Below are various states of financial distress: 1. defaulting on a principal payment on debt 2. restructuring debt 3. liquidatin
    9·1 answer
  • Brea is looking for an insurance policy for her car. Her friend, Justin, who is an attorney, just told her that the policy is a
    13·1 answer
  • The ________ assumes responsibility for monitoring how the contractor is doing in terms of cost, schedule, and technical perform
    9·1 answer
  • Whats y'alls fav basketball team?
    9·2 answers
  • LO 4.1Which of the following is a conversion cost?
    6·1 answer
  • Trio company reports the following information for the current year, which is its first year of operation
    5·1 answer
  • 16) When Amazon acquired Whole Foods, the brick-and-mortar supermarket, the company was pursuing a ________ strategy.
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!