1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
OverLord2011 [107]
3 years ago
11

The Jameson Company just paid a dividend of $0.75 per share, and that dividend is expected to grow at a constant rate of 5.50% p

er year in the future. The company's beta is 1.15, the market risk premium is 5.00%, and the risk-free rate is 4.00%. What is Jameson's current stock price, P0?
Business
1 answer:
belka [17]3 years ago
5 0

Answer:

Jameson's current stock price, P0 is  $18.62

Explanation:

Required rate of return = Risk free rate + Beta*Market risk premium.

                                       = 4.00% + 1.15*5.00 %

                                       = 9.75 %

Current stock price, P0

= Expected dividend per share/(Required rate of return - Growth in dividends)

= (0.75 + 5.50%*0.75)/(0.0975 - 0.055)

= $18.62

Therefore, Jameson's current stock price, P0 is  $18.62

You might be interested in
B&B Corporation is authorized to sell 60,000 shares of $10 par, 6% cumulative preferred stock and 90,000 shares of $6 par co
Vesna [10]

Answer:

Dividend paid to preferred stock holders = 6% x $10 x 30,000 = $18,000

Dividend paid to common stock holder = $40,000 - $18,000 = $22,000

Explanation:

The dividend paid to preferred stock holders is a function of dividend rate, par value and number of preferred stocks outstanding.

The dividend paid to common stock holders is the difference between total dividend declared and dividend paid to preferred stock holders.

7 0
2 years ago
lauryn’s doll co. had ebit last year of $45 million, which is net of a depreciation expense of $4.5 million. in addition, lauryn
dem82 [27]

If Lauryn's has a reported equity beta of 1.5, a debt-to-equity ratio of .3, and a tax rate of 21 percent.. The Free Cash Flow (FCF) of Lauryn's for the year is 20.45

FCF = (EBIT -Depreciation)× ( 1- Tax rate) + Depreciation - Capital expenditure - Working Capital investment = (45 -4.5 ) × ( 1 - 40%) + 4.5 - 4.25 -4.1 = 20.45

Beta Asset = Beta Equity /( 1 + (1-tax rate)×D/E) = 1.5/( 1 + ( 1-40%)× 0.3) = 1.2712

According To Capm WACC = Risk free rate + Betaasset × Market Risk Premium = 4% + 1.2712 × 12% = 19.2544%

Value of The firm = FCFF × ( 1+growth)/(Return - Growth) = 20.45 × 1.02/(19.2544% - 2%) = 120.89 million

  • Free cash flow (FCF) is the money a business makes after subtracting the cash it must spend to run its business and maintain its capital assets. Or to put it another way, free cash flow is the money that remains after a business pays its operating expenses (OpEx) and capital expenditures (CapEx).
  • A corporation may do whatever it wants with FCF, which is the money that is left over after paying for expenses like labor, rent, and taxes. A company's cash management will be aided by knowing how to compute and analyze free cash flow. Investors can improve their investment choices by using the FCF calculation to get insight into a company's financials.

Learn more about Free cash flow (FCF), here

brainly.com/question/16852008

#SPJ4

5 0
1 year ago
What are the steps to using a database template? Use the drop-down menus to complete them.
Hoochie [10]

Answer:

1) New 2) Location 3) Create

Explanation:

Edg 2020

8 0
3 years ago
Read 2 more answers
To avoid the difficulties involved in starting a business from scratch, Sana decides to obtain the rights to operate an outlet o
Mariana [72]

Answer:

Franchisee

Explanation:

A franchise business is a form of business arrangement where a business owners , who is known as the franchisor , sells the right to operate its business to another entity known as the Franchisee.

This business arrangement is legally binding an it gives right to the use of the business name , logo ,and model to third party retail outlet.

This explains the type of business arrangement that Sana is planning , considering the explanation given in the question.

8 0
3 years ago
Read 2 more answers
What problems can result for an organization and its customers when the organization acts in an ethically questionable manner?
Marrrta [24]
Sales manager and buyer the organization acts in an ethically questionable manner
7 0
3 years ago
Other questions:
  • Item 6Item 6 Theodore Levitt advocates for a global culture characterized by standardized tastes and global markets. What is one
    14·1 answer
  • In the country Blestonia, people value relationships over business. They use communication as a means of building social relatio
    9·1 answer
  • In Year 1, the actual budget deficit was $200 billion and the standardized deficit was $150 billion. In Year 2, the actual budge
    15·1 answer
  • A country's fertility rate suggests zero population growth, but it shows an increase of 20—30 percent over 50 years. what might
    15·1 answer
  • Nation A makes is illegal for its citizens to own more than one vehicle in order to reduce emissions. Nation A’s neighbor Nation
    15·1 answer
  • Explain partner by estoppel ...and please follow me ​???
    6·1 answer
  • First Fidelity Insurance received a call from Second Fifth Bank regarding Margaret Gessner, a former Fidelity employee. Gessner
    6·2 answers
  • ________ are defined as organized cognitive representations of the key elements within a team's environment that team members sh
    11·1 answer
  • Kleener Co. acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $52,000 and has an estimat
    15·1 answer
  • Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales:
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!