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
umka21 [38]
3 years ago
14

OMG Corporation just paid a $1.60 annual dividend on each share. It is planning on increasing its dividend by 16 percent a year

for the next 4 years. The corporation will then decrease the growth rate to a rate of 6 percent per year, and keep it that way indefinitely. The required rate of return is 7.10 percent. Calculate the current value of one share of this corporation's stock.
Business
1 answer:
mamaluj [8]3 years ago
8 0

Answer:

$220.028

Explanation:

According to dividend valuation model, the price of share is the present value of all the dividends that the share will give in future.

Based on the above statement the price of the share of the OMG Corporation  shall be determined as follows:

Present value of year 1 dividend=1.856(1+7.10%)^-1            $1.733

(1.60*1.16)

Present value of year 2 dividend=2.153(1+7.10%)^-2           $1.88

(1.856*1.16)

Present value of year 3 dividend=2.497(1+7.10%)^-3          $2.033

(2.153*1.16)

Present value of year 4 dividend=2.897(1+7.10%)^-4          $2.202          

(2.497*1.16)

Present value of all dividends after year 4=                        $212.18

[2.897(1+6%)/7.10%-6%]*(1+7.10%)^-4

Price of share                                                                        $220.028

You might be interested in
Exercise 7-29 (LO. 6) Tim, a single taxpayer, operates a business as a single-member LLC. In 2018, his LLC reports business inco
Taya2010 [7]

Answer:

From 2018, there is a threshold limit of $250,000 defined by IRS for single:

(a) Tim has an excess business loss:

= Business loss - Threshold

= $350,000 - $250,000

= $100,000

(b) Tim may use $250,000 of the $350,000 LLC business loss to offset non business income.

The excess business loss is treated as the portion of the Tim's NOL carry forward.

Excess business loss of $100,000 will be treated as the NOL carryforward to subsequent years.

4 0
2 years ago
Explain corporate bond interest in terms of cost of capital versus investor yields. also, explain the municipal bond interest in
astraxan [27]

A sort of financial product sold to investors is a corporate bond, which is issued by a business. The investor receives a predetermined amount of interest payments at either a fixed or variable interest rate in exchange for providing the firm with the money it requires.

The bond "reaches maturity" when it stops making payments and the initial investment is refunded.

The ability of the corporation to repay the bond often serves as its security, and this ability is based on its expectations for future revenues and profitability. Physical assets of the corporation may occasionally be utilized as collateral.

A state, municipality, or county may issue municipal bonds as a debt security to pay for capital projects like building roads, bridges, or schools. They can be compared to loans given to local governments by investors.

Municipal bonds are particularly appealing to those in higher income tax brackets because they are frequently exempt from federal taxes and the majority of state and local taxes (for residents).

To learn more about Corporate Bond and Municipal Bonds here

brainly.com/question/14116276

#SPJ4

7 0
2 years ago
The elements of the business environment include the:.
quester [9]

Answer:technological environment, economic and legal environment, competitive environment

Explanation:

5 0
2 years ago
NextLinx Corporation provides a wide range of strategic implementation services for small- and medium-sized organizations. It al
maks197457 [2]

Answer:

The correct answer is: e-commerce enabler.

Explanation:

An e-commerce enabler is an online-based business that allows other individuals and businesses to offer their products as part of the enabler's webpage. The e-commerce enabler acts as a mall where different stores offer their goods without the need of having a correlation. One of the most famous e-commerce enabler worldwide is Alibaba.

5 0
3 years ago
What effect does the change in the market for cripps pink apples have on the price of the apples and on the quantity supplied an
Anika [276]

Answer:

The change in the market for Cripps  is positively related with other apples.

Explanation:

The Cripps pink apples are the substitute to the other apples so there is a direct relationship between the price one commodity and the demand for its substitute commodity. Therefore, if the price of Cripps pink apples rises, then the demand for other apples will rise also because of substitute goods. Similarly, if the price fall, then the demand for other apples will also fall. Thus substitute goods encompass a positive relationship.

3 0
3 years ago
Other questions:
  • 4. Why is the customer service department of a company important?
    14·1 answer
  • International marketing can be defined as
    13·1 answer
  • When Ford discovered the fault with its Pinto model that caused the car to explode easily when hit from the rear, what action sh
    11·1 answer
  • Suppose that real domestic output in an economy is 2400 units, the quantity of inputs is 60, and the price of each input is $30.
    11·1 answer
  • When do you think is the first point where you will first need to get life insurance?
    10·1 answer
  • Identify whether you think you may or may not become an entrepreneur and launch your own
    8·1 answer
  • According to Interland (2009), the art of economics consists in looking not merely at the immediate but at the longer effects of
    13·1 answer
  • Petter Jansen purchased 100 shares each in Sygnette and Joey Stores a year ago. He paid $62.85 and $121.15 per share respectivel
    13·1 answer
  • Firms are more likely to effectively leverage their technologies in new markets if they identify new applications of the technol
    11·1 answer
  • In year 1, Heron Corp. has depreciation expense for income statement purposes of $10,000. The depreciation deduction on the tax
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!