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Katyanochek1 [597]
3 years ago
7

Best Value Outlet recently announced that it intends to pay dividends of $0.40, $0.60, $0.75, and $1.00 per share over the next

four years, respectively. After that, the plan is to increase the dividend by 3.5 percent annually. What is the current value of this stock if the applicable discount rate is 13.5 percent?
A. $6.44
B. $7.83
C. $8.17
D. $9.55
E. $13.10
Business
1 answer:
Umnica [9.8K]3 years ago
4 0

Answer:

correct option C

Explanation:

Give data:

next four year dividend - $0.40,$0.60, $0.75 and $1.00

interest rate - 3.5%

Year    Particulars  Amount  [email protected]%       PV

 1        Dividend      0.4            0.881             = 0.4 *0.881 = $0.3524

 2      Dividend      0.60          0.7763            = 0.60 *0.7763 = $ 0.4658

 3      Dividend      0.75           0.6839           = 0.5129

 

 4      Dividend      1.00          0.6029             = 0.6026

 4      Price            $10.350       0.6026          = 6.2367

current value  = (0.3524 + 0.4658+0.5129+0.6026+6.2367) = $8.17

[email protected]% for dividend 0.40

= \frac{1}{(1+13.5\%)^{year\ 1}}

                                                    = \frac{1}{(1+13.5\%)^{1}} = 0.881

 

[email protected]% for dividend 0.60

= \frac{1}{(1+13.5\%)^{year\ 2}}

                                                  = \frac{1}{(1+13.5\%)^{2}} = 0.0.7763

Price is calcualted as

= \frac{year\ 4*1.035}{13.5\% - 3.5\%}

=\frac{4*1.035}{13.5\% -3.5\%}

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Answer:

b. Storing

Explanation:

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Smith Commercial Development has effective control processes, allowing its managers to discover ______ in bookkeeping right away
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Complete Question:

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Group of answer choices

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Answer:

A. Irregularities and errors.

Explanation:

In this scenario, Smith Commercial Development has effective control processes, allowing its managers to discover irregularities and errors in bookkeeping right away, before a would-be embezzler could seriously affect its business.

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Answer:

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Based on the bid quote on the Canadian dollar, and the bid-ask spread, the ask rate will be $1.15.

<h3>What will be the ask rate?</h3>

This can be found as:

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