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Elza [17]
3 years ago
13

Westover Winds just paid a dividend of $2.10 per share. The company will increase its dividend by 8 percent next year and will t

hen reduce its dividend growth rate by 2 percentage points per year until it reaches the industry average of 2 percent dividend growth, after which the company will keep a constant growth rate forever. What is the price of this stock today given a required return of 11 percent?

Business
1 answer:
Alla [95]3 years ago
7 0

Answer:

Price today = $26.54

Explanation:

The price of the stock can be calculated using the Dividend Discount Model (DDM). The DDM values the stock based on the present value of the expected future dividends from the stock.

The formula to calculate the price of the stock is attached.

Price today = 2.1 * (1+0.08) / (1+0.11)  +  2.1 * (1+0.08) * (1+0.06) / (1+0.11)^2  +  

2.1 * (1+0.08) * (1+0.06) * (1+0.04) / (1+0.11)^3  +  

[(2.1 * (1+0.08) * (1+0.06) * (1+0.04) * (1+0.02)) / (0.11 - 0.02)] / (1+0.11)^3

Price today = $26.54

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yarga [219]

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benefit of staying relevant within the market

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Based on the information provided within the question it can be said that this perspective that the Company has taken gives them the benefit of staying relevant within the market. This is because by providing gamers with new and great products, they are giving them exactly what they want which will in term increase sales/profits for the company as well as attention from potential customers.

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3 0
3 years ago
In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances,
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The economic incentive was to produce enough to meet the output target, without regard for quality or cost.

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As the only condition for the payment to the producers is linked with the output thus there is no constraint for the quality and the sales of the product. This indicated that the producer will get the reward irrespective whether the quality or cost of the product is feasible or not.

8 0
3 years ago
Read 2 more answers
Ives Corp. has an inventory period of 22.4 days, an accounts payable period of 36.5 days, and an accounts receivable period of 3
leva [86]

Answer:

The Company's cash cycle is 17.3 days

Explanation:

The cash cycle is computed by the following formula:

Receivable No of days+ Inventory No of days- Payables No of days

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In the above question, Ives Corp is making an efficient operation of its cash resources. The payables are more than inventory, so the payables are financing the inventory as well as partly the receivables.  

4 0
3 years ago
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Whitepunk [10]

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The correct answer is letter "B":You have to earn below a certain amount to make contributions .

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A Roth Individual Retirement Account (IRA) is the type of retirement account where contributions grow tax-free and allows individuals to withdraw funds under certain conditions. <em>People are eligible to open a Roth IRA as long as their income is less than $139,000 for singles and $206,000 for married couples- </em>information that applies for the year 2020.

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3 years ago
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