Answer:
Explanation:
Price is sum of:
1. Present value of expected dividend payments during 1-4 years;
2. Present value of the expected market price at the end of the fourth year based on growth at 5%.
Present value of expected dividend payments during 1-4 years:
PV1 = 3*(1+0.30)*0.8929 = 3.90*0.8929 = $3.482
*0.8929 = 1/1.12
PV2 = 3.90*1.30*0.7972 = 5.07*0.7972 = $4.042
PV3 = 5.07*1.30*0.7118 = 6.591*0.7118 = $4.691
PV4 = 6.591*1.30*0.6355 = 8.5683*0.6355 = $5.445
Total = $17.661
Present value of the expected market price at the end of the fourth year:
Market price of the share at the end = 5th year dividend/(Required rate of return - growth rate)
5th year dividend = $8.5683*(1+growth rate) = $8.5683*(1+0.05) = $9
Market price of the share at the end = $9/(0.12-0.05) = $128.57
Present value of $128.57 is 128.57*0.6355(present value interest factor for year 4) = $81.7
So the price of share is $17.661+$81.7 = $99.37
Answer:
$74.61
Explanation:
The computation of the value of preferred stock is shown below:
Value of preferred stock = Annual dividend ÷ return of preferred stock per share
= 10.40% × 100 ÷ 13.94%
= $74.61
Simply we divide the annual dividend by the value of preferred stock per share so that the correct value of preferred stock can be computed
Answer:
The people who buy the stock
Explanation:
I'm not sure but that's my best guess considering they bought it and would more than likely have to sign a contract of liability.
Answer:
Explanation:
For answer , see the attached file.
The answers are
Savings accounts become less desirable because interest earned is lower than inflation
Individual purchasing power increases, which results in an increase in demand.
