Answer:
The price of the stock today is $16.83
Explanation:
The current price per share can be estimated using constant growth model of the DDM. The price per share can be calculated using the following formula,
P0 = D1 / r - g
To calculate the price today, we use the dividend expected for the next period. Thus, using the dividend that will be paid at t=11 or D11, we can calculate the price of the stock at t=10. We further need to discount this price using the required rate of return for 10 years to calculate the price of the stock today.
P10 = 6 * (1+0.04) / (0.14 - 0.04)
P10 = $62.4
The price of the stock today will be,
P0 = 62.4 / (1.14)^10
P0 = $16.83
Answer:
a) H0: u = presence of a unit root
HA: u ≠ presence of a unit root ( i.e. stationary series )
b) t stat = -0.064
c) We will reject the Null hypothesis and the next step will be to accept the alternative hypothesis
d) It is not valid to compare the estimated t stat with the corresponding critical value because a random walk is non-stationary while the difference is stationary because it is white noise
Explanation:
<u>a) stating the null and alternative hypothesis</u>
H0: u = presence of a unit root
HA: u ≠ presence of a unit root ( i.e. stationary series )
<u>b) performing the test </u>
critical value = -2.88
T stat = coefficient / std error
= -0.02 / 0.31 = -0.064
c) From the test, the value of T stat > critical value we will reject the Null hypothesis hence the next step will be to accept the alternative hypothesis
d) It is not valid to compare the estimated t stat with the corresponding critical value because a random walk is non-stationary while the difference is stationary because it is white noise
Answer:
The rate of return expected on this project by Cold Goose Metal Works Inc. is 15.20%
Explanation:
Since flotation cost is 4% that implies that $500,000 is actually 96% (100%-4%) of the cash proceeds from the capital funding,hence funds raised is computed thus:
funds raised=$500,000/0.96=$520,833.33
Annual return on investment=cash inflow-initial cash outflow
cash inflow is $600,000
cash outflow is $520,833.33
annual return on investment=$600,000-$520,833.33=$79166.67
rate of return on project=annual return on investment/initial investment
=$79,166.67
/$520,833.33*100=15.20%
The rate of return that Cold Goose Metal Works Inc is 15.20%
Answer:
Which factor can boost business opportunities in Virginia?
Re-branding
Well packaged advertorials
discount sales
promo sales
improve content quality
price reduction
Explanation:
The answer is 1 level apart because 4-5=1 and 5 is 1 more up than 4
