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Tresset [83]
3 years ago
6

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because t

he firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $10 per share 10 years from today and will increase the dividend by 6 percent per year thereafter. If the required return on this stock is 10 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
Montano1993 [528]3 years ago
3 0

Answer:

$106.02

Explanation:

Div₀ - Div₉ = 0

Div₁₀ = $10 and then will grow by 6% forever

we must first determine the terminal value for year 9 using the dividend growth model:

P₉ = Div₁₀ / (Re - g) = $10 / (10% - 6%) = $10 / 4% = $250

now we shall discount this to present day value:

P₀ = $250 / (1 + 10%)⁹ = $250 / 2.3579 = $106.02

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kicyunya [14]
The globalization of business sectors alludes to the converging of truly unmistakable and isolate national markets into one immense worldwide commercial center. Falling hindrances to cross-outskirt exchange have made it less demanding to offer universally. It has been contended for quite a while that the tastes and inclinations of purchasers in various countries are starting to focalize on some worldwide standard, along these lines making a worldwide market.
4 0
4 years ago
Read 2 more answers
g The perfectly competitive firm faces a downward sloping demand curve. a horizontal supply function. perfectly elastic demand.
egoroff_w [7]

Answer:

Option C (perfectly elastic demand) seems to be the correct alternative.

Explanation:

  • Large companies manufacture similar products which cannot be separated from those manufactured by certain rivals.  
  • Price increases become decided on the market as well as firm price changes, marketing their production at either the current market value. Increasing organizations face a relatively elastic consumer surplus equivalent to something like the sale value.  

All other alternatives in question are not relevant to the unique scenario. But that's the correct answer above.

6 0
3 years ago
A form of government spending that is not made in exchange for a currently produced good or service is called
NeX [460]

Answer:

Transfer payment

Explanation:

Transfer payment in finance can be as well regarded as " government transfer" it is income and wealth redistribution which occur when payment is made by government without exchange of goods or services in return. It should be noted that Transfer payment is a form of government spending that is not made in exchange for a currently produced good or service. Some of the common transfer payment type is social insurance programs, as well as business subsidies.

3 0
3 years ago
An investment offers $8,600 per year for 17 years, with the first payment occurring one year from now. Assume the required retur
elena-14-01-66 [18.8K]

Answer: $1,986.14

Explanation: in order to calculate this, we will use the discounting formula and calculate the present value (PV) of the money.

PV = C/(1 + r)^n

Where:

PV = Present Value = ?

C = value of money in the future = $8,600

r = interest rate = 9% or 0.09

n = number of years = 17

PV = 8,600/(1 + 0.09)^17

PV = 8,600/(1.09)^17

PV = 8,600/4.33

PV = 1,986.14

Therefore the present value is $1,986.14

8 0
3 years ago
Contributions to a Coverdell Education Savings Account must cease when the beneficiary reaches the age of: A 16 B 18 C 21 D 30
Dima020 [189]

Answer:

B) 18

Explanation:

A Coverdell Education Saving Account accepts contributions up to the 18th birthday of the beneficiary, unless the beneficiary has "special needs" (usually some type of disability).

Coverdell ESA are very similar to a 529 plan, except that the beneficiary is the owner of the funds, not the account owner. Both accounts offer tax free earnings growth and tax free withdrawals, as long as they are used to cover qualifying educational expenses.

6 0
3 years ago
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