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
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

You might be interested in
common lit capataliasmn-Which phrase best describes the relarionship between workers and bussiness owners in capatalists cociety
vesna_86 [32]

Answer:

In order for the government to be able to help with a problem, the problem must be brought to the proper of government and the proper.In order for the government to be able to help with a problem, the problem must be brought to the proper of government and the proper.

Explanation:

5 0
3 years ago
Given the following changes what is the net effect on cash? (1) Accounts Receivables increases by $150; Inventory decreases by $
Karolina [17]

Answer:

Net Cash Increase of $115

Explanation:

Receivable Increases by $150 means a cash outflow in receivable by $150 because Increase in Receivable indicates that there are more sale on credit is made than cash received from the customers. So, the outflow in the receivable section is more than the inflow.

Inventory Decreases by $95 means the inventory sold during the period is more than purchases / manufactured. It result in cash inflow as cash is not being held in the form of inventory.

Accounts Payable increases by $225 means that company is making less payment to its suppliers, so that its balance has been increase. Company made more purchases than payment made to suppliers. Net cash Inflow is observed from this.

Common dividend payment of $55 means a direct cash outflow because actual cash has been paid during the year.

Net Effect on Cash = Cash inflows - Cash outflows

Net Effect on Cash = ( Inventory decrease + Accounts Payable increase ) - ( Accounts Receivables increase + Common dividend payment )

Net Effect on Cash = ( $95 + $225 ) - ( $150 + 55 )

Net Effect on Cash = $320 - $205

Net Effect on Cash = $115

Net Cash Increase of $115

6 0
3 years ago
True or false? Individual electronic components can be combined into larger groups, called diodes, to increase their usefulness.
Butoxors [25]
This is False.

A diode is something completely different, but can be found in a computer and is an important electronic part.
8 0
3 years ago
How important are signs.symbols and designs in relation to carpentry?if you do not have access to internal.you may answer based
Anastaziya [24]

Answer:

Symbols—such as gestures, signs, objects, signals, and words—help people understand that world. They provide clues to understanding experiences by conveying recognizable meanings that are shared by societies.

Explanation:

<h2>I HOPE IT HELPS PO...☺️☺️☺️</h2>
6 0
3 years ago
On the basis of the research it has gathered on consumer perceptions, the tests it has conducted, and competitive considerations
Elan Coil [88]

Answer:

1) the product launch.

Explanation:

As the product in consideration is new, and that the company performs the analysis of customer demands and needs for the product to be introduced, also the company defines the target market for its product, this conclusively reflects that the company wants to launch a new product.

Since it is a preliminary activity basically analyzing market before launch of product, there are no results therefore there is no evaluation of results.

Further there is a market testing, not for the entire company products, but only for the new product thus, it can not be termed as pre-market demonstrations.

6 0
3 years ago
Other questions:
  • A sales tax, especially when food and medicine are subject to the tax, can be described as what type of tax?
    8·1 answer
  • A customer has been receiving confirmations and statements by mail and asks the registered representative if these can be sent b
    5·1 answer
  • if real gdp in 1995 was $4053.7 billion and nominal gdp in 1995 was $4220.3 billion, what was the value of the gdp deflator in 1
    6·1 answer
  • The Procter &amp; Gamble Company is a major producer of bar soaps. In fact, Procter &amp; Gamble produces Ivory,Camay, Lava, Saf
    7·1 answer
  • Income Statement. A firm’s income statement included the following data. The firm’s average tax rate was 20%. (LO3-1) Cost of go
    11·1 answer
  • Wizard Co. purchased two machines for $250,000 each on January 2, 2005.
    9·1 answer
  • Eric manages a grocery store in a country experiencing a high rate of inflation. He is paid in cash. On payday, he immediately g
    12·2 answers
  • Natural resources occur in the environment.
    7·1 answer
  • Outsourcing: Question 19 options: Transfers traditional internal activities to outside vendors. Utilizes the efficiency which co
    7·1 answer
  • For product costs associated with a particular product to be reported on the income statement: Group of answer choices The produ
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!