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Arisa [49]
3 years ago
8

Savickas Petroleum's stock has a required return of 12%, and the stock sells for $43 per share. The firm just paid a dividend of

$1.00, and the dividend is expected to grow by 30% per year for the next 4 years, so D4 = $1.00(1.30)4 = $2.8561. After t = 4, the dividend is expected to grow at a constant rate of X% per year forever. What is the stock's expected constant growth rate after t = 4, i.
e., what is X?
Business
2 answers:
Elodia [21]3 years ago
6 0
<span>Given Data:
</span><span>
The return = 12%</span><span>

Stock price = </span>$43/share
<span>
Dividend = $1.00

Growth rate = </span><span>30% per year

</span> D₄ = $1.00 × (1.30)⁴

<span>      = $2.8561.
</span><span>
Stock's expected constant growth rate after t = 4 
</span>
Stock's expected constant growth rate:

                                                              X = 6.34%
Evgen [1.6K]3 years ago
3 0

Answer:

This question is missing options,which are as follows:

a.  

5.15%

b.  

6.78%

c.  

6.37%

d.  

5.49%

e.  

7.25%

The expected stock's constant growth rate after t=4 is 6.78%.which is the same as X.

The correct option is B

Explanation:

Kindly find attached excel file for detailed computation.

Download xlsx
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Answer: $53.94

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Current share price is the present value of the dividends for the next 3 years and the terminal value in year 3.

Terminal value = D₄ / ( required return - growth rate)

= (2.35 * 1.22³ * 1.05) / (12 % - 5%)

= $64

D₁ = 2.35 * 1.22 = $2.867

D₂ = 2.867 * 1.22 = $‭3.49774‬

D₃ = ‭3.49774‬ * 1.22 = $‭4.2672428‬

Share price = (2.867 / (1 + 12%)) + (‭3.49774‬ / 1.12²) + (‭4.2672428‬ / 1.12³) + (64/1.12³)

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3 years ago
In its income statement for the year ended December 31, 2022, Whispering Winds Corp. reported the following condensed data. Oper
vagabundo [1.1K]

The Multiple Income Statement is $127,000.

<h3>Multiple Income Statement</h3>

Multiple Income Statement For the Year Ending Dec. 31, 2022

Particulars Amount ($)

Net sales 2,199,000

Less: Cost of goods sold 1,255,000

Gross profit 944,000

(2,199,000-1,255,000)

Less: Operating expenses 719,000

Operating income 225,000

(944,000-719,000)

Other revenue:

Interest revenue 32,000

Other expenses and losses:

Interest expense 70,000

Add: Loss on disposal of plant assets 16,000

Total other expenses and losses 86,000

(70,000+18,000)

Income before tax  171,000

(225,000+32,000-86,000)

Less: Income tax expense 44,000

Net income 127,000

(171,000-44,000)

Therefore the Multiple Income Statement is $127,000.

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Talarczyk Company sold 10,000 Super-Spreaders on December 31, 2017, at a total price of $1,000,000 cash, with a warranty guarant
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A firm based in mexico has found its growth is restricted by the limited liquidity of the mexican capital market. what are the f
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The searching companies can work for equity or debt loans in order to raise money on global capital markets. The debt of a foreign institution, lender, and other debt suppliers is also an option to raise money in the capital market. As equity loans include the sale of equity to investors, the issue of bonds is part of debt loans. Capital costs are usually less than in the domestic market and the company can even borrow money from the bank. And enterprises need to be very careful to take into account the risk of adverse exchange rates because, if the peso is to be depreciated, they should be aware of the cost of acquiring the currency needed to repay a foreign exchange loan.

Moreover, foreign equity, floating foreign or Eurobonds offerings, or borrowing on the Euro currency markets may be considered by the Mexican firm. The euro currency market would then certainly provide the company with additional funding at a lower rate domestically. And if the peso decreases in the next 2 years, the company has to repay the credit in a different currency unless the company can use the future market. The value of euro currency loans would definitely be reduced.

We can recognize that the use of both foreign and euro bonds has the same disadvantages as the bonds have to be repaid in an anti-peso currency. The international bond market has important points that are worth considering, given the fewer regulations, disclosure requirements, and fiscal implications if the currency risk can be properly analyzed and minimized. Since the foreign equity market requires no payment to its stockholders and also has the greatest independence from its actions, it is perhaps the most attractive for the company. So, if the hesitations are to be overcome, investors will likely have loan strong growth prospects.

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