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kramer
3 years ago
14

A firm just paid an annual dividend of $1.00 today. The dividend is expected to growth at a rate of 14% for the next three years

, and then 6% thereafter. The required rate of return on this stock is 9%. What is the value of this stock? Round to the nearest cent. Do not include the dollar sign in your answer. (i.e. If your answer were $1.23, then type 1.23 without a $ sign)
Business
1 answer:
pychu [463]3 years ago
3 0

Answer:

Value of stock is $49.33

Explanation:

Dividend valuation method is used to calculate the the value of stock based on the dividend paid, its growth rate and rate of return.

Calculate dividend after 3 years first

Current Dividend = D0 = $1

Dividend after 3 year = D3 = D0 ( 1 + g )^n = $1 ( 1 + 0.14 )^3 = $1.48

Rate of return = r = 9%

Growth = g = 6%

DVM Formula for stock value

Price  = Dividend / Rate of return - Growth rate

Price of stock = D3 / ( r - g ) = $1.48 / ( 9% - 6% ) = $1.48 / 3% = $49.33

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The chief executive officer earns $20,000 per month. as of may 31, her gross pay was $100,000. the tax rate for social security
omeli [17]

The total is $1,437.

Before June she had already paid social security on $100,000 in earnings. So, in June she only needs to pay social security on $18,500.

$18,500 x .062 = $1,147

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The total amount of FICA -social security withheld from this employee in June is $290 + $1,147 = $1,437

5 0
3 years ago
Read 2 more answers
A firm is reviewing an investment opportunity that requires an initial cash outlay of $336,875 and promises to return the follow
Fofino [41]

Answer:

The NPV of this investment is $64,581.75

Explanation:

Hi, we need to discount to present value all the future cash flows, the formula to use is as follows:

NPV=-Investment+\frac{CF1}{(1+r)^{1} }+\frac{CF2}{(1+r)^{2}} +\frac{CF3}{(1+r)^{3}} +\frac{CF4}{(1+r)^{4}} +\frac{CF5}{(1+r)^{5}}

Where

NPV = Net Present Value

CF = The cash flow stated in the problem by year

r= discount rate (in our case, 0.08 or 8%)

Now, let´s solve this.

NPV=-336,875+\frac{100,000}{(1+0.08)^{1} }+\frac{82,000}{(1+0.08)^{2}} +\frac{76,000}{(1+0.08)^{3}} +\frac{111,000}{(1+0.08)^{4}} +\frac{142,000}{(1+0.08)^{5}}

NPV=-336,875+ 92,592.59 + 70,301.78 + 60,331.25 + 81,588.31+96,642.81

NPV=64,581.75

So, the net present value of this project is $64,581.75

Best of luck.

7 0
3 years ago
Equivalent Units of Materials Cost The Rolling Department of Kraus Steel Company had 200 tons in beginning work in process inven
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Answer:

The total equivalent units for direct materials for October is  4,200

Explanation:

The Concept of Equivalent Units measures the number of units completed in terms of input element introduced in the process.

The Equivalent Units are Calculated on the units ending that is on  the Units Completed and Units of Closing Work in Process

Note that materials are added at the beginning of the process

<u>Units Completed</u>

Are 100% complete in terms of Raw Materials

Equivalent units = 3900 × 100 % = 3900

<u>Units of Closing Work in Process</u>

Are 100% complete in terms of Raw Materials

Equivalent units = 30 × 100 % = 300

Total Equivalent Units = 3900+300 =  4,200

6 0
3 years ago
5. Which of the following is not true regarding proprietary funds? A) Enterprise funds are used by governments to account for se
Tanzania [10]

Answer:

The correct answer is D) The operation of internal service funds has no impact on other funds because it is run as a business and provides services that would have been purchased elsewhere by the other funds.

Explanation:

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6 0
3 years ago
A bank has $400 in checkable deposits, $800 in savings deposits, $700 in time deposits, $900 in loans to businesses, $300 in out
sergij07 [2.7K]

Answer: $400

Explanation:

M1 money supply simply refers to the monies which are liquid like the checkable deposits, traveler's checks, and the coins and currencies that are in circulation.

Therefore, based on the information given in the question, the bank's deposits that are part of M1 will be the $400 in checkable deposit.

3 0
2 years ago
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