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
serious [3.7K]
3 years ago
6

Bretton, Inc., just paid a dividend of $3.05 on its stock. The growth rate in dividends is expected to be a constant 5 percent p

er year, indefinitely. Investors require a return of 12 percent on the stock for the first three years, a rate of return of 10 percent for the next three years, and then a return of 8 percent thereafter. What is the current share price for the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
Neko [114]3 years ago
3 0

Answer:

The current share price of the stock: $91.12.

Explanation:

Current share price is equal to the total net present value of the following dividend streams:

The first dividend stream from Y1 to Y3 as followed: Y1: 3.05 x 1.05 = 3.2025; Y2 = $3.3626; Y3 = 3.5308 => Present value of the first dividend stream = 3.2025/1.12 + 3.3626/1.12^2 + 3.5308/1.12^3 = $8.0532.

The second dividend stream fro Y4 to Y6 is : Y4 = 3.3326 x 1.05 = 3.4992; Y5 3.4992 x 1.05 = 3.6742; Y6 = 3.6742 x 1.05 = 3.8579 => Present value of the second dividend stream = 3.4992/1.1^4 + 3.6742/1.1^5 + 3.8579/1.1^6 = $6.8491.

The last dividend stream Y7: 4.0508 and grow 5% each year to the indefinite => Present value is [4.0508/(8% - 5%)]/1.1^6 = $76.219.

=> Current share price = 76.219 + 6.8491 + 8.0532 = $91.12 ( round to two decimal places).

You might be interested in
The __________ effect occurs when people improve some aspect of their behavior or performance simply because they are being asse
Ratling [72]

Answer:

The Hawthorne effect occurs when people improve some aspect of their behavior or performance simply because they are being assessed.

Explanation:

Organizational behavior is the study of the way an individual or group of individuals act in a given organizational setting. This area of study aims at examining the behavior of an individual as it relates to the work environment and how such behavior affects their performance, drive, communication and job structure. The principles or organizational behavior aim at improving the efficiency in a work environment. The principles are used to improve efficiency in various aspects of the job structure, for example; job performance, better communication, improving leadership skills and increasing satisfaction in the job.

Organization behavior studies have its foundation in the late 1920s. The Western Electric Company was a pioneer in launching a study to determine the behavior of its workers. They initially started out with workers at Hawthorne Works plant in Cicero, Illinois. This was followed by numerous organizational research. They later came up with what is now known as the Hawthorne effect, which is the improvement of an aspect of peoples behavior simply because they are being assessed.

5 0
4 years ago
Rather than acquiring Almodovar Holdings in Spain, Omega, Inc. chose to establish new operations in that country. This form of F
Flauer [41]

Answer: Greenfield investment

Explanation:  

 The green field investment is one of the form of FDI (Foreign direct investment) and by using this type of investment process the company basically creating the various types of new facilities such as selling process and the production facility.

The greenfield investment is one of the type of economics based concept it helps in forming the various types of marketing partnership and also control all the relative investing process.

According to the given question, the greenfield investment is one of the type of foreign direct invest process that helps in establishing the new function and operation in the country.

Therefore, Green-field investment is the correct answer.

4 0
3 years ago
Transaction taxes and Excise taxes are two types of _______ taxes
Otrada [13]

Transaction taxes and Excise taxes are two types of consumption taxes

6 0
3 years ago
Monte Services, Inc. is trying to establish the standard labor cost of a typical brake repair. The following data have been coll
Iteru [2.4K]

Answer and Explanation:

The computation is shown below:

1. The standard direct labor hours per brake repairs are shown below:

Actual time spent               5  hours

Setup and downtime (5 hours × 11%) 0.55

Cleanup and rest periods (5 hours × 27%) 1.35

Standard direct labor hours per brake repair 6.9

2. For standard direct labor hourly rate

Wage rate per hour $10

Payroll Taxes ($10 × 10%) $1

Fringe Benefits ($10 × 25%) $2.5

Standard direct labor hourly rate $13.5

3. For the standard direct labor cost per brake repair

= 6.9 hours × $13.5

= $93.50

5 0
3 years ago
QS 6-2 Inventory costs LO C2 A car dealer acquires a used car for $16,000, with terms FOB shipping point. Compute total inventor
natima [27]

Answer:

$17,190

Explanation:

Costs that make up the cost of an asset are cost of purchase , sales tax , transportation , shipment insurance , import duties on items , assembly installation and all other costs incurred in making the assets ready for use.

Workings

Cost of purchase - 16,000

Transportation - in      210

Shipping insurance-    120

Car import duties -      860

Total cost                 17,190    

Other cost will the expensed as incurred

6 0
4 years ago
Other questions:
  • You are sleepy before your 8
    8·1 answer
  • If total liabilities decreased by $24,119 during a period of time and stockholders' equity increased by $33,952 during the same
    14·1 answer
  • Miguel is doing a research paper on new york city's stonewall riots of 1969. he visits the scene of the riots, interviews people
    6·1 answer
  • The​ _____ is determined by the number of separate items within the same category. it is typically reflected in the number of​ s
    8·1 answer
  • After work on fridays, the male middle managers at health equipment, inc. go to the golf course to play a quick nine holes and t
    15·1 answer
  • Which of the following cognitive biases occurs when decision makers commit even more resources if they receive feedback that the
    10·1 answer
  • Dolan Company reports its income from investments under the equity method and recognized income of $25,000 from its investment i
    14·1 answer
  • Your friend Burrell says that the government should hire fewer social workers in order to reduce the cost of federal assistance
    9·1 answer
  • Adjusting entries accounting
    7·2 answers
  • OK I need to think of a name for my business. My business I want to make will have lip gloss,bath bombs, necklaces, rings and ot
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!