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Alona [7]
4 years ago
13

Global Tek plans on increasing its annual dividend by 15 percent a year for the next four years and then decreasing the growth r

ate to 2.5 percent per year. The company just paid its annual dividend in the amount of $.20 per share. What is the current value of one share of this stock if the required rate of return is 17.4 percent?a. $1.82 b. $218 c. $2.03 d. $2.71 e. $3.05
Business
1 answer:
ad-work [718]4 years ago
6 0

Answer:

A) $1.82

Explanation:

the dividends discount model is used to determine the value of stock given the distributed dividends and the required rate of return:

current dividend $0.20 per stock

dividends year 1 =  $0.23 per stock

dividends year 2 =  $0.2645 per stock

dividends year 3 =  $0.3042 per stock

dividends year 4 =  $0.35 per stock

after year 4, we need to calculate the growing perpetuity = dividend / (return rate - growth rate) = $0.35 / (17.4% - 2.5%) = $0.35 / 14.9% = $2.35

now we must find the present value of the cash flows:

PV = $0.23/1.174 + $0.2645/1.174² + $0.3042/1.174³ + $0.35/1.174⁴ + $2.35/1.174⁵ = $0.1959 + $0.1919 + $0.188 + $0.1842 + $1.0537 = $1.82

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The curve and calculation are attached below

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4 years ago
The Sensor Dynamics Corporation did a scientific study on the impact of absenteeism on increased costs. It determined that there
valentina_108 [34]

Answer:

d. Absenteeism significantly increases costs.

Explanation:

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1.0 means a perfect positive correlation and when r = -1.0 indicates a perfect negative correlation. where correlation, is zero (0), it means there is no relationship between the variables being tested.

Since correlation in this question is 0.7 which is tending towards +1, it means there is a strong or significant correlation between absenteeism and increased costs

7 0
4 years ago
A potential bondholder is considering four companies for investment. Which company has the lowest likelihood of defaulting on th
Ann [662]

Answer:

Company 4 has a times interest earned ratio of 14.3.

Explanation:

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A higher TIE number shows that a company has enough cash after paying its obligations to continue to invest in the business.

In this particular case, it is company 4, because its TIE is the highest

4 0
3 years ago
In the circular flow of economic​ activity, there are two kinds of markets in which firms and households interact. In the fact
brilliants [131]

Answer:

Factor market is the market where companies purchase the factors of production  and resources that they utilise to produce goods and services. They buy the productive resources  to make payments at factor prices.  Factor maker is also called input market. It is different from product market in which the households are buyers and businesses are sellers. The factor market is opposite of this.

4 0
4 years ago
Lintner Beverage Corp. reported the following information from their financial statements:
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Answer:

Consider the following calculations

Explanation:

EBIT - Interest + Dividend Income ( 1 - 0.7) = EBT

$ 14.000.000 - $ 1.750.000 + $ 1.000.000 * 0.3 = $ 12.550.000

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$ 3400000 + $ 892500 = $ 4292500 in total taxes due

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3 years ago
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