Answer:
$37.05
Explanation:
Data provided in the question:
last dividend, D0 = $1.55
Dividend growth rate, g = 1.5% = 0.015
growth rate after 2 year = 8.0% = 0.08
Required rate of return , r= 12% = 0.12
Now,
Year 1 dividend = $1.55 × ( 1 + 0.015 ) = $1.57325
Year 2 dividend = $1.57325 × ( 1 + 0.015 ) = $1.5968
Stock price after year 2 = [ $1.5968 × ( 1 + 0.08) ] ÷ (0.12 - 0.08)
= $43.11
Therefore,
The current stock price = amounts discounted back to the present at the required rate of return
= ( $1.57325 ÷ 1.12 ) + ( 1.5968 ÷ 1.12² ) + ( $43.11 ÷ 1.12² )
= $37.05
Company's revenue is 50 billion usd per year
money it makes per hour = ?
1 year = 365 days and 1 day = 24 hours
so 1 year = 365 x 24 = 8760 hours
now divide 50 billion with 8760 hours
50,000,000,000 / 8760 = 5707762.557 usd per hour
Answer:
Bondholders have a degree of legal protection against default risk, but it is not comprehensive.
Explanation:
A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.
The par value of a bond is its face value and it comprises of its total dollar amount as well as its maturity value. Also, the par value of a bond gives the basis on which periodic interest is paid. Thus, a bond is issued at par value when the market rate of interest is the same as the contract rate of interest. This simply means that, a bond would be issued at par (face) value when the bond's stated rated is significantly equal to the effective or market interest rate on the specific date it was issued.
In Economics, bonds could either be issued at discount or premium. A bond that is being issued at a discount has its stated rate lower than the market interest rate, on the specific date of issuance while a bond that is issued at a premium, has its stated rate higher than the market interest rate on the specific date of issuance.
Default risk in bonds refer to the risk that a bond issuer (borrower) is unable to pay the principal or interest agreed upon in the contract with the bondholder (lender) in a timely manner.
Hence, the true statement about default risk is that bondholders have a degree of legal protection against default risk, but it is not comprehensive.
Answer: Yes, the distribution between the dividend yield and the capital gains yield would influence the firm’s decision to pay more dividends rather than to retain and reinvest more of its earnings.
Explanation:
Yes, If a company decides to increase its dividend payout ratio, the dividend yield component will rise, but the expected long-term capital gains yield will decline as there is less to reinvest in the company. Also, if the company doesn't pay out dividends, there's more to reinvest in the company. Stable and older companies that are not on a growth objective rely on investors that prefer dividends more than share price appreciation. On the other hand, emerging companies, are inclined to share price appreciation to attract investors. Investors understand that all retained earnings are going towards marketing and growth objectives.
