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Jet001 [13]
3 years ago
13

Royal Bank common shares pay dividends annually. They just paid a​ $1.50 dividend. Stock holders require a return of​ 12%. Royal

is expected to continue paying dividends that will grow at​ 3.5% per annum in perpetuity. What is the fair price of a share of Royal Bank​ stock?
Business
1 answer:
Oxana [17]3 years ago
8 0

Answer: $18.26

Explanation:

The Dividend discount model can be used to calculate he fair price of the Royal bank stock.

The formula is;

= Next dividend/ ( Required rate of return - growth rate)

= ( 1.5 * ( 1 + 3.5%))/ ( 12% - 3.5%)

= $18.26

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You borrow $210,000 to purchase a home. the terms of the loan call for monthly payments over 30 years at a mortgage rate of 4.50
Dmitry_Shevchenko [17]
First step, find the monthly payments.
Borrowed amount, P = 210000
Monthly interest, i = 0.045/12
Number of periods, n = 30*12=360

Monthly payment
A=\frac{P(i*(1+i)^n)}{(1+i)^n-1}
=\frac{210000(0.045/12*(1+0.045/12)^360)}{(1+0.045/12)^360-1}
=1064.0392    [to the 1/100 of a cent]


2. Calculate interest accumulated over 60 months
I=210000((1+0.045/12)^{60}-1)
=52877.12

3. Calculate value of payments
F=\frac{A((1+i)^n-1)}{i}
=\frac{1064.039150634359((1+0.045/12)^{60}-1)}{0.045/12}
=71445.50    to the nearest cent

4. Calculate percentage of interest paid
A. as a fraction of future values
Percentage of interest
=52877.12/71445.50
=74.01%
As a fraction of total amounts paid
Percentage of interest
=52877.12/(60*1064.0392)
=52877.12/63842.35
=82.82%
6 0
3 years ago
The distinction between a normal and an inferior good is A. normal goods are used for the same purposes while inferior goods are
zubka84 [21]

Answer:

The correct answer is C. when income​ increases, demand for a normal good increases while demand for an inferior good falls.

Explanation:

The normal good is that whose quantity demanded for each of the prices increases when the rent increases. A lower good is one whose quantity demanded decreases when income increases. The inferior goods are usually those for which there are higher quality alternatives. When it comes to a normal good, increasing the income of the consumer increases the quantity demanded at each price. Causing a shift in demand to the right.

3 0
3 years ago
Suppose that the average wage earner saves 7% of her take-home pay and spends the other 93%. Also suppose that 93% of any amount
natali 33 [55]
You dad is gay and left you for the milk
7 0
2 years ago
Which action will be least helpful if youve been the victim of identity theft
xxTIMURxx [149]
The action that will be the least helpful if you've been the victim of an identity theft is to withdraw your money from all accounts.
This is not something you should do if this happens to you - but rather report this fraud to the officials so that they can fix this for you. They will be able to give you your last credit report and contact any company where you have money so as to let them know to freeze your account for a while until this get solved.
3 0
3 years ago
You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equ
alexgriva [62]

Answer:

A. 8.15

Explanation:

WACC is the firm's weighted average cost for the capital that is employed from different sources which includes common equity, preferred equity and debt.

In order to calculate WACC, the weighted average cost of each capital is added, so the formula becomes:

WACC = (E x %E) + (D x (1 - Tax) x %D) + (PE x %PE)

E = Common equity

D = Debt

PE = Preferred equity

%E = Common equity / total capital

%D = Debt / total capital

%PE = Preferred equity / total capital

Tax = Tax rate

<em>Interest on debt is a tax deductible expense therefore the interest rate is taken after accounting for tax in order to calculate WACC.</em>

<u>Calculation:</u>

Using the above formula we can calculate WACC

WACC = (11.25% x 55%) + (6.5% x (1-40%) x 35%) + (6% x 10%)

WACC = 0.0815 or 8.15%

7 0
3 years ago
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