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
erma4kov [3.2K]
2 years ago
9

Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However

, investors expect Simpkins to begin paying dividends, with the first dividend of $1.25 coming 3 years from today. The dividend should grow rapidly - at a rate of 80% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 6% per year. If the required return on the stock is 16%, what is the value of the stock today (assume the market is in equilibrium with the required return equal to the expected return)? Do not round intermediate calculations. Round your answer to the nearest cent.
Business
1 answer:
madreJ [45]2 years ago
6 0

Answer:

Answer is $50.94 or $50.9

Explanation:

The present value of a stock along with the continuous growth is one of the formulas that are being used in the dividend discount model, particularly as it relates to stocks that the speculation assumes will increase perpetually.

Please find the detailed answer as follows:

Current Value

= 1.25/(1+.12)^3 + 1.25*(1+75%)/(1+.12)^4 + 1.25*(1+75%)^2/(1+.12)^5 + 1.25*(1+75%)^2*(1+7%)/(1+.12)^5*(12%-7%) = $50.94 or $50.9

Answer is $50.94 or $50.9

Thanks.

You might be interested in
Teal Company sells televisions at an average price of $814 and also offers to each customer a separate 3-year warranty contract
ki77a [65]

Answer:

A.

Dr Cash 266,178

Cr Sales Revenue 243,741

Cr Unearned Warranty Revenue 22,437

b)Current Liabilities:Unearned Warranty Revenue 90,579

Long-term liabilities:Unearned Warranty Revenue 181,158

Explanation:

Teal Company

A.

Dr Cash (814*327) 266,178

Cr Sales Revenue 243,741

Cr Unearned Warranty Revenue (277*81) 22,437

b)Current Liabilities:Unearned Warranty Revenue 90,579

(327×277)

Long-term liabilities:Unearned Warranty Revenue 181,158

(90,579×2)

4 0
3 years ago
Which of the following is a style trend?
maks197457 [2]
Answer:
B

Explanation:
8 0
3 years ago
A business owner paid cash for employee wages. This activity would be reported on the Statement of Cash Flows as a.as a subtract
vodka [1.7K]

Answer:

bygg  gg

Explanation:

5 0
3 years ago
There may be a maximum balance requirement for a savings account.<br> True<br> False
luda_lava [24]

Answer:

true

Explanation:

For example, if a bank account has a $100 minimum balance requirement, you want to make sure that you don't let your balance fall to $99.99 or less.

4 0
2 years ago
Customers are central to the principles of convergence. they should not be viewed as ______ viewers of content but ______ users
zvonat [6]

Customers are central to the principles of convergence. They should not be viewed as passive viewers of content but active users that play a central role in your narrative.

In order to create experiences that strengthen the customer's relationship with the brand, three powerful forces—media, technology, and creativity—come together through convergence. A customer-centric mindset must be adopted, and the entire organization must become responsive to the customer journey. Strategies must be supported by evidence from actual customer behavior rather than arbitrary gut instinct. It should be determined by that data where, when, and how to serve customers. Consumers must be involved in brand messaging through social platforms and ecosystems. The organization will always need to be modified for convergence. Testing, learning, constructing, and destroying are ongoing processes.

Learn more about convergence here:

brainly.com/question/15213854

#SPJ4

6 0
2 years ago
Other questions:
  • Which student best fills the role of group notetaker? Yuna, who is positive and considers other viewpoints Hiroto, who is focuse
    8·1 answer
  • _____ studies the whole economy, such as investments made by all consumers and businesses.
    8·2 answers
  • A client is admitted to an acute care facility after an episode of status epilepticus. After the client is stabilized, which fac
    8·1 answer
  • The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 4,500 per day. FSF supplies hot dogs to local restaurants a
    6·1 answer
  • Logan Company can sell all of the standard and premier products they can produce, but it has limited production capacity. It can
    5·1 answer
  • How are a startup's financing requirements estimated
    15·1 answer
  • Individual Activity 1: Marty and the Martins
    5·2 answers
  • Carla Vista Company purchases Sandhill Company for $2470000 cash on January 1, 2021. The book value of Sandhill Company’s net as
    15·1 answer
  • What are all Nippon airways 3 Levels of Strategy?
    13·1 answer
  • Why should humans be concerned about rarity of species, not just extinction rates?.
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!