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levacccp [35]
3 years ago
8

West Side Corporation is expected to pay the following dividends over the next four years: $16, $12, $11, and $7.50. Afterward,

the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 16 percent, what is the current share price?
a. $63.27.
b. $61.40.
c. $68.82.
d. $65.17.
e. $60.11.
Business
1 answer:
Tom [10]3 years ago
3 0

Answer:

$77.81

Explanation:

We are given that West Side Corporation is expected to pay the following dividends over the next four years: $16, $12, $11, and $7.50.

Required rate - 16%

Growth rate = 6%

We are supposed to find the current share price

Formula :P_0=\sum_{t=0}^{T}\frac{D_T}{(1+r)^t}+\frac{D_{T+1}}{r-G}(1+r)^{-T}

D = Dividends

t = time

r = required rate

G= Growth rate

Substitute the values in formula :

P_0=\frac{16}{(1+0.16)^1}+\frac{12}{(1+0.16)^2}+\frac{11}{(1+0.16)^3}+\frac{7.50}{(1+0.16)^4}+\frac{7.50(1+0.06)}{0.16-0.06}(1+0.16)^{-4}\\P_0=77.81\\

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2 years ago
Activity-based costing (ABC) systems ________. A. Unselected have the same cost allocation system as plantwide and departmental
atroni [7]

Answer:

D. have separate cost allocation rates for each activity identified by the company CORRECT

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Explanation:

A. have the same cost allocation system as plantwide and departmental cost allocation systems

NO If it was, then it would not have a different name

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4 0
3 years ago
Stock X has a standard deviation of 25 percent per year and stock Y has a standard deviation of 16 percent per year. The correla
Zanzabum

Answer:

The portfolio standard deviation is 14.82%

Explanation:

The portfolio standard deviation would be calculated by finding out the variance of the portfolio and taking the square root of it.

Variance of the portfolio = [(1 - .50)^{2} x 0.25^{2}] + [0.50^{2} x 0.16^{2}] + [2 x (1 - 0.50) x 0.50 x 0.25 x 0.16 x 0]

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Std DevPort = 0.1482 = 14.82 percent

3 0
3 years ago
Read 2 more answers
The fund has not borrowed any funds, but its accrued management fee with the portfolio manager currently totals $25,000. There a
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Answer:

$9.79

Explanation:

The computation of the  net asset value of the fund is shown below:

Net asset value of the fund = Equity ÷ Total outstanding shares

where,

Equity

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where,

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So, the net asset value of the fund equal to

= ($39,200,000 - $25,000) ÷ (4,000,000 shares)

= $9.79

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2 years ago
A company has recorded the last five days of daily demand on its only product. Those values are 120, 125, 124, 128, and 133. The
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8 0
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