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melomori [17]
3 years ago
11

The Bradshaw Company's most recent dividend was $6.75. The historical dividend payment by the company shows a constant growth ra

te of 5 percent per year. What is the maximum you would be willing to pay for a share of its common stock if your required rate of return is 8 percent?
Business
1 answer:
Paha777 [63]3 years ago
3 0

Answer:

$236.25

Explanation:

Given that,

Recently dividend paid, D0 = $6.75

Growth rate of dividend, g = 5 percent per year

Required rate of return, rr = 8 percent

Therefore, the stock price is calculated as follows:

= [D0 × (1 + g)] ÷ (rr - g)

= [6.75 × (1+5%)] ÷ (8% - 5%)

= $236.25

Hence, the maximum you would be willing to pay for a share of its common stock if your required rate of return is 8 percent is $236.25.

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Wine and Roses, Inc., offers a bond with a coupon of 7.0 percent with semiannual payments and a yield to maturity of 7.75 percen
Aneli [31]

Answer:

P = 9359.8

Explanation:

Given:

  • n = 14
  • YTM = 7.75% = 0.0775
  • F = 1000
  • Coupon rate = 7.0 percent => Coupon payment is: 1000*7% = 70

As we know that, the formula to find out YTM is:

       YTM = [C + (F-P/n) ] / (F+ P) / 2

<=> 0.0775 = [ 70 + (1000 - P/14)] / (1000+P)/2

<=> 0.0775(1000+P) /2 =  70 + (1000 - P/14)

<=> 0.0775(1000+P)  = 140 + 2(1000 - P/14)  

<=> P = 9359.8

So the price of the $1,000 face value bond is 9359.8  

5 0
4 years ago
Read 2 more answers
Christy Reed has been depositing $2,000 in her savings account every December since 2001. Her account earns 7 percent compounded
Sergio [31]

Answer:

Future Value is $35776.902

Explanation:

Given data

saving = $2000

rate = 7 % = 0.07

time = 12 year

to find out

Future Value?

solution

we will apply here future value formula that is

Future Value = saving × (1 + rate)^time - 1 /  rate

put all value here and we get

Future Value =2000 × (1 + 0.07)^12 - 1 / 0.07

Future Value = 2000 × 17.888451

Future Value is $35776.902

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3 years ago
If the supply of a product increases, then we would expect equilibrium price
olga55 [171]

With everything else remaining constant, an increase in supply will result in a decrease in the equilibrium price and an increase in the amount required.

The equilibrium price will increase as the supply declines, while the quantity needed will go down. Demand and supply forces are balanced at an equilibrium price. Prices have a propensity to return to this equilibrium unless certain demand or supply characteristics alter. When demand, supply, or both move or change, the equilibrium price will change. Price decreases and quantity increases as supply grows. Price increases and quantity declines cause a drop in supply. The equilibrium price rises if the increase in supply exceeds the increase in demand. The equilibrium price falls if the increase in supply is greater than the rise in demand. Equilibrium quantity rises in both scenarios. The equilibrium price and quantity are impacted by upward movements in the supply and demand curves. The equilibrium price rises but the quantity decreases if the supply curve changes upward, indicating that supply declines but demand remains constant. For instance, pump prices are expected to increase if gasoline supply are reduced.

Learn more about equilibrium price hear :

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5 0
1 year ago
Both newspaper journalists and postal workers have been negatively affected by
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The answer is "A) the popularity of electronic communication and the Internet".
Electronic communication provides the convenience for people. It leads the conventional newspaper and mail substituted by the electric one. The newspaper has been substituted by the electronic news. The conventional mail has been substituted by<span> social media and e-mail.</span>
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what is the word for the amount of money taken from an employee's gross pay for taxes, insurance, Social Security, and other ben
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Deductions...................................







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