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
Snowcat [4.5K]
3 years ago
7

Miltmar Corporation will pay a year-end dividend of $5, and dividends thereafter are expected to grow at the constant rate of 4%

per year. The risk-free rate is 5%, and the expected return on the market portfolio is 12%. The stock has a beta of 0.72.
a. Calculate the market capitalization rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Market capitalization rate _____ %
b. What is the intrinsic value of the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Intrinsic value ___ $.
Business
1 answer:
morpeh [17]3 years ago
7 0

Answer:

a. 10.04%

b. $82.78

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

a. Expected rate of return or market capitalization = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 5% + 0.72 × (12% - 5%)

= 5% + 0.72 × 7%

= 5% + 5.04%

= 10.04%

The Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is applied.

b. Now the intrinsic value would be

= Expected dividend ÷ (Required rate of return - growth rate)  

= $5 ÷ (10.04% - 4%)

= $5 ÷ 6.04%

= $82.78

You might be interested in
When the indirect method is used, if accounts receivable increases during the accounting period, the change in accounts receivab
liberstina [14]
The answer is that "<span>the change in accounts receivable is subtracted from net income".
</span>

<span>When the indirect method is used, the starting point is the net income and it is transformed to cash flows from operational actions by adding back losses and subtracting gains so that these quantities are removed.</span>

4 0
3 years ago
Which of the following statements is true of comparative negligence? Group of answer choices It allows a plaintiff to claim dama
Ostrovityanka [42]

The inference illustrates that the true statement about comparative intelligence is that it compares a plantiffs fault with a defendant's and reduces the damage award proportionally.

<h3>What is an inference?</h3>

It should be noted that an inference simply means the conclusion that can be deduced from the information given.

In this case, the inference illustrates that the true statement about comparative intelligence is that it compares a plantiffs fault with a defendant's and reduces the damage award proportionally.

Learn more about inference on:

brainly.com/question/25280941

#SPJ1

3 0
2 years ago
Read 2 more answers
Business behavior is derived in large part from the basic cultural environment in which the business operates and, as such, is s
solong [7]

Answer:

TRUE

Explanation:

The influence of cultural on business behavior is broadly encompassing. Cultural impacts ranges from understanding employee behavior and employees management methodologies; i.e. how best to manage employees based on their values and priorities. It also impacts the functional areas of marketing and distribution: what people appreciate and the peculiarities of their environment. It also greatly impact and is a strong determinant factor of success when a company is taking a decision on how best to enter a new market.

When business ignore cultural factors they are guilty of ethnocentrism and could be orchestrating business failure.

7 0
3 years ago
Alex Timbers, a wood supplier, receives an order of 10 wooden logs from a furniture manufacturing company. The client brief ment
tester [92]

Answer:

<em>Inaccurate</em>

Explanation:

<em>The information that was given to Alex Timbers who was a wood supplier that furniture manufacturing company requires teak wood, this information was </em><u><em>inaccurate</em></u><em>.</em>

Because we can see in the scenario which is mentioned in the question that the quality specialist of that furniture manufacturer company observes that the logs that was sent by Alex Timbers are very big, as the company itself ordered for teak wood, and we know that teak wood is very big. So, we can say that information provided by the company was inaccurate.

4 0
3 years ago
Seller Dayne was made aware by the trustee that the lender was wanting to proceed with foreclosure on his property. What type of
elena55 [62]

Answer:

Promissory agreement and Deed of trust.

Explanation:

In this scenario, Seller Dayne was made aware by the trustee that the lender was wanting to proceed with foreclosure on his property. The type of financial agreement that Seller Dayne have with this lender is a Promissory agreement and Deed of trust.

A promissory agreement can be defined as an evidence of a debt and as such involves the use of a legal financial tool such as a promissory note as a written promise to declare that a party (borrower) would pay another (lender) at a specific period of time.

On the other hand, a deed of trust can be defined as a legal document used by a party (borrower) to pledge his or her property to another party (lender) as guarantee or collateral for the repayment of a loan. The deed of trust is typically made up of three (3) parties; the lender, borrower and a trustee.

Additionally, a foreclosure on a property refers to a legal procedure whereby the property being pledged by a borrower for a debt is sold to pay off the debt as a result of defaulting in payments or terms with respect to a loan.

6 0
3 years ago
Other questions:
  • A description of the processes you use to ensure that results meet the specified quality standards is a _____.
    11·2 answers
  • In a project charter, the _____ describes the project and justifies why the project should be done.
    6·1 answer
  • What is the term for the price a dealer pays when purchasing a car from a manufacturer?
    6·2 answers
  • A company has beginning inventory of 10 units at a cost of $10 each on February 1. On February 3, it purchases 20 units at $12 e
    9·1 answer
  • A major goal of integrated marketing communications is to send a consistent message to _____.
    6·1 answer
  • TheTerraMaxtruck currently being manufactured and field tested by Oshkosh Truck Co. is a driver- less truck intended for militar
    15·1 answer
  • Mario and Johnny want to start a business. They have very little capital. They are new partners and largely unfamiliar with each
    14·1 answer
  • When the price of oil ——————
    5·1 answer
  • Use each of these key terms to best complete the following sentences. Use each term no more than once. Agreeableness
    11·1 answer
  • According to market technicians, it is time to sell stock in a head-and-shoulders formation when?
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!