A stock has a current annual dividend of $6.00 per year, and it is expected to grow by 3% (0.03) a year. It is expected that two
years from now the stock will sell for $90.00 a share. If the interest rate is 5% (0.05), the dividend-discount model predicts the stock's current price should be
The answer is true. It is because if the reader fails to act then it meant that he or she is not doing his or her job in which he or she should be doing and by that, his or her outcome in the task that he or she is assigned to will likely be wasted or be poorly done such as the sales message being wasted if the reader had failed to act.
The computation of the change in net operating income is shown below:
= Increase in monthly sales unit × contribution margin per unit - increased monthly advertising
= 140 units × $52 - $5,000
= $7,280 - $5,000
= $2,280
Since this comes in a positive figure that results in increased in monthly net operating income we simply considered the change in monthly sales unit, monthly advertising, and the contribution margin per unit
