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
klasskru [66]
3 years ago
10

Tyson Inc. is currently trading at $18 per share. The company is expected to pay a dividend of $1.63/per share next year. The di

vidend is expected to growth 2.5% per year into perpetuity, and the cost of equity is currently 10.5%. Using Gordon growth what is the present value of Tyson Inc, and given you answer should you buy or sell the stock
Business
1 answer:
viktelen [127]3 years ago
5 0

Answer:

$20.38  buy

Explanation:

The computation of present value is shown below:-

Fair Value according to Gordon Model = Expected Div ÷ (Required Return - Growth rate)

= $1.63 ÷ (10.5% - 2.5%)

= $1.63 ÷ 8%

= $20.38

Fair Price = $ 20.38 and Actual Price = $18.00

As Fair Price is greater than the Actual Price so, the stock is under priced. Therefore advice to buy.

You might be interested in
A used-car dealer has a vehicle on the lot with a sticker price of $5999. if the dealer markup on used vehicles is 20%, how much
cupoosta [38]
A price markup is an increase in the price the dealer sells that he ensures in order to gain guaranteed profit. If the markup is 20%, this means that he added 20% of what he paid for the car, and used this price for sale. Therefore, we let x be the price the dealer paid for the car.

$5999 = x + 0.2x = 1.2x
x = $4999

Thus, the dealer paid $4999 originally for the car.

5 0
2 years ago
Read 2 more answers
Can you contest a divorce on the very last day?
Citrus2011 [14]
You actually can cause it wasn’t far alone in the relationship
6 0
3 years ago
Read 2 more answers
Jamal (now age 54) lost his job. he has very specialized skills that are no longer in demand. jamal's unemployment is best class
NISA [10]
His unemployment is best classified as Structural. 
3 0
3 years ago
Midyear on July 31st, the Chester Corporation's balance sheet reported:
erastova [34]

Answer:

$76.856 million

Explanation:

As we know that Balance sheet is divided in two portions.

1. Total Assets (Current Assets + Fixed Assets)

2. Total Liabilities and Share Holders' Equity.

and they both should be equal. So we can write from the above information, as:

Total Assets = Total Liabilities + Total Common Stock + Retained Earnings

N.B. We are excluding Cash from our calculation cause we assume that Cash is already been included in Total Assets.

Hence, by putting the values in above equation we can find our Retained Earnings as:

Retained Earnings + $128.230 million + $6.350 million = $211.436 million

Retained Earnings + $134.58 million = $211.436 million

Retained Earnings = $211.436 million - $134.58 million

Retained Earnings = $76.856 million

6 0
3 years ago
disposable income (billions of dollars per year) total consumption (billions of dollars per year) $ 0 $ 50 200 210(table 9.1) wh
katovenus [111]

C = 50 + 0.8Y is the consumption function that is consistent with the provided data. The MPC is determined by subtracting the change in consumption from the change in disposable income, which equals 160/200, or 0.8.

Marginal propensity calculation.

$200 billion less $0 billion equals $200 billion in changes to disposable income.

Consumption change equals $210 minus $50, or $160 billion.

MPC = Change in Consumption/Change in Disposable Income, which equals $160 billion/$200 billion and is equal to 0.8.

There is a 0.8 marginal tendency to consume.

Step 2

This is how consumption function is defined.

C = a + bY

Where,

a = Consumption at zero income level

b = MPC

In given case,

$50 billion would be consumed at a level of income zero.

MPC is 0.8

So,

C = 50 + 0.8Y is the consumption function that matches the provided data.

To learn more about consumption function

brainly.com/question/14975005

#SPJ4

4 0
11 months ago
Other questions:
  • Rachel jogs in the morning. her friend, who is jogging behind her, only has a 50 percent chance of calling out to her when she i
    11·2 answers
  • 1. Gerald and Moira Johnson, are married taxpayers with two children, Michael and Oliver. Oliver lives with the Ryans and Michae
    9·1 answer
  • When JCPenney markets its Sandra Salcedo line of clothing to Hispanic women in Texas and Northern California, but not to other a
    14·1 answer
  • An assembly line manager changes the times she observes behavior to determine rewards for workers. One day, she observed employe
    14·1 answer
  • JBC Corporation is owned 20 percent by John, 30 percent by Brian, 30 percent by Charlie, and 20 percent by Z Corporation. Z Corp
    15·1 answer
  • Sue’s bank account has a balance of $899.83 before she starts spending money. She makes the following transactions: Transaction
    6·2 answers
  • During March, Pendergraph Corporation incurred $65,000 of actual Manufacturing Overhead costs. During the same period, the Manuf
    10·1 answer
  • You speculate in crude oil futures. Last month, you purchased ten January futures contracts at a quoted price of 99.91. These co
    15·2 answers
  • A bottling company uses two inputs to produce bottles of the soft drink​ Sludge: bottling machines​ (K) and workers​ (L). The is
    5·1 answer
  • You are considering an investment in Crew Cut, Inc. and want to evaluate the firm's free cash flow. From the income statement, y
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!