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kogti [31]
3 years ago
11

A share of BAC common stock has just paid a dividend of $1.00. The market return is 12% and the beta is 1.5. The three month T-b

ill rate is 4%. The expected long-run growth rate for this stock is 8 percent. (Keep your answer to only two decimals) a. What is the required return for the stock ? (hint: CAPM) (Example of the answer format: 55.55% ) b. What is the stock price? (Example of the answer format: $55.55))
Business
1 answer:
myrzilka [38]3 years ago
5 0

Answer:

a. 16.00%

b. $13.50

Explanation:

a. The computation of the required return is shown below:

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 4% + 1.5 × (12% - 4%)

= 4% + 1.5 × 8%

= 4% + 12

= 16.00%

b. Now the stock price is

= Current year dividend ÷ (Required rate of return - growth rate)

= ($1 × 1.08) ÷ (16% - 8%)

= 1.08 ÷ 8%

= $13.50

We simply applied the above formulas

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Answer:

Explained briefly in the explaination box.

Explanation:

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PLEASE HELP! WILL MARK BRAINLIEST!! 10 POINTS
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Answer: a)$18,000 and b)$200,000

Explanation:

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3 years ago
which of the following is the guiding economic philosophy of the free enterprise system? socialism communism marxism capitalism
Degger [83]
I believe the answer is: Capitalism

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3 years ago
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Speedy Auto Repairs uses a job-order costing system. The company’s direct materials consist of replacement parts installed in cu
Masteriza [31]

Answer:

Instructions are listed below

Explanation:

Giving the following information:

Estimates:

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Fixed overhead costs $ 198,000.

Variable overhead cost per direct labor-hour $ 1.00

A) overhead rate= (fixed + variable cost)/direct labor hour

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Answer:

27.14  months

Explanation:

to calculate how long it will take to pay the loan, we can use an excel spreadsheet and the NPER function:

=NPER(rate,payment,-loan)

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=NPER(1.03%,630,14850) = 27.14  months

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