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Westkost [7]
3 years ago
14

Auto Transmissions is expected to pay annual dividends of $1.90 and $2.10 over the next two years, respectively. After that, the

company expects to pay a constant dividend of $2.30 a share. What is the value of this stock at a required return of 15 percent?
Business
1 answer:
kupik [55]3 years ago
8 0

Answer:

$14.83

Explanation:

D1 = 1.90

D2 = 2.10

D3 (onwards)  = 2.30; meaning growth rate g = 0

Find the Present value of each year's dividend at 15% interest rate;

PV(D1) = 1.90/(1.15) = 1.6522

PV(D2) = 2.10/(1.15²) = 1.5879

PV(D3 onwards) = \frac{[\frac{2.30}{0.15-0} ]}{1.15^{2} } = 11.5942

Next, sum up of these present values of these dividends to find the value of the stock;

1.6522 + 1.5879 + 11.5942 = 14.8343

Therefore, the price of the stock is $14.83

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The required reserve ratio is 0.05. If the Federal Reserve buys​ $1,000,000 worth of bonds from a bond dealer who has her accoun
Radda [10]

Missing information:

total deposits in bank XYZ = $4,000,000

total reserves = $3,800,000

Answer:

the required reserve = $250,000

excess reserves = $4,550,000

Explanation:

required reserve ratio = 5%

the Fed buys $1,000,000 worth of bonds

the $1,000,000 are deposited entirely in bank XYZ

total checkable deposits will increase to $5,000,000

the required reserve = $5,000,000 x 5% = $250,000

excess reserves = total checkable deposits - total loans - required reserves = $5,000,000 - $200,000 - $250,000 = $4,550,000

5 0
3 years ago
An investor owns 60 shares of common stock of a company issuing new shares in a rights offering. The stock trades at $12 per sha
Mkey [24]

Answer:

7 shares and $70

Explanation:

The computation is shown below:

The additional shares is

= 60 shares ÷ 9

= 7 shares

And, the amount  of money that have to be paid is

= Additional shares × purchase price

= 7 × $10

= $70

Therefore the same would be considered relevant

4 0
3 years ago
A bakery sold apple pies for $11 and blueberry pies for $13. one saturday they sold a total of 38 pies and collected a total of
Nimfa-mama [501]
So first you know that if a is apple pies and b is blueberry that
$460=11a+13b in terms of price and you also know that the number
a+b=38
I solved that for either a or b (I chose a)
So
A=38-b
Them I plugged it in to the money equation to solve for b
460=11(38-b)+13b
460=418-11b+13b
460=418+2b
42=2b
B=21
Therefore you can do 38(total pies)-21(what b equals) to find the apple pies which would be 17 so a=17
Therefore the answer is B (17 apple and 21 blueberry)
5 0
3 years ago
Read 2 more answers
suppose that the value of an investment in the stock market has increased at an average compound rate of about 5% since 1912. it
Nat2105 [25]

The investments today’s worth is $203001.61.

We have to calculate the future value of the investments. So we can use the formula,

A=P (1+r/100)ⁿ

Where, A stands for future value, P stands for Present value, R stands for Interest rate, n stands for Time period.

Interest rate (r) = 5%= 0.05 and Time period is from 1912 to 2020 so, it is equals to 108 years. (2020-1912year)

On putting the values in the above formula we get,

A = 1000× (1+ 5/100)^108

=1000*203.001612

=$203001.61

The worth of a current asset at some point in the future based on an estimated rate of growth is known as future value (FV). The future value calculation enables investors to forecast, with varying degrees of accuracy, the amount of profit that can be generated by various investments.

Investors and financial planners use the future value to estimate how much an investment made today will be worth in the future. The future value equation is used to assess various possibilities since the growth produced by holding a given amount in cash will probably differ from that produced by investing that same amount in equities.

To learn more about future value, refer this link.

brainly.com/question/24703884

#SPJ4

5 0
1 year ago
Home of households, inc., has an appliance manufacturing plant in the chicago area. the company specializes in producing smaller
Allushta [10]

Answer:

Exporting.

Explanation:

Exporting is the process where goods and sert are produced on one country and sold to buyers in another country. Usually contries produce goods they in which they incur low cost compared to other countries for export.

Home of households produces smaller washers and dryers for countries where consumers have less living space. So they are exporting.

6 0
3 years ago
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