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GarryVolchara [31]
3 years ago
8

Todd Mountain Development Corporation is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow a

t the rate of 7% per year. The risk-free rate of return is 4%, and the expected return on the market portfolio is 19%. The stock of Todd Mountain Development Corporation has a beta of 0.60. Using the constant-growth DDM, the intrinsic value of the stock is _________. Multiple Choice
Business
1 answer:
Tatiana [17]3 years ago
7 0

Answer:

$60

Explanation:

r = return = Risk-free rate + [beta * (Portfolio expected return - Risk-free rate)] 0.04 + [0.60 * (0.19 − 0.04)] = 0.13

Intrinsic value = Next dividend / (r - Growth rate) = 3 / (0.13 - 0.08) = $60

Therefore, the intrinsic value of the stock of Todd Mountain Development Corporation is $60.

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2 years ago
Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we woul
erma4kov [3.2K]

In the market for personal computers, we would expect the Equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.

<h3>What is equilibrium quantity?</h3>
  • When there is no shortage or surplus of a product on the market, it is said to be in equilibrium quantity.
  • When supply and demand meet, the amount of an item that consumers want to buy equals the amount supplied by its producers.
  • The equilibrium price is the only price at which consumers' and producers' plans coincide—that is, the amount consumers want to buy of the product, quantity demanded, equals the amount producers want to sell, quantity supplied.
  • Assume there is an increase in both supply and demand for personal computers.
  • The Equilibrium quantity would then rise in the market for personal computers, while the change in the equilibrium price would be ambiguous.

Therefore, in the market for personal computers, we would expect the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.

Know more about equilibrium quantity here:

brainly.com/question/22569960

#SPJ4

The correct question is given below:

Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect the Equilibrium quantity to ______ and the change in the equilibrium price to be __________

8 0
2 years ago
A company forecasts free cash flow in next year to be $20 million, $25 million in second year, and 30 million in third year. Aft
Norma-Jean [14]

Answer:

Current value from operations is $534.71 million.

Explanation:

The value from operations can be calculated by discounting back the free cash flow of the firm. The first three year's FCF will be discounted back using the WACC and when the growth rate o FCF becomes constant after Year 3, the terminal value will be calculated and discounted back too.

The current value from operations = FCF1 / (1+WACC) + FCF2 / (1+WACC)² + FCF3 / (1+WACC)³  +  [FCF3 * (1+g)  /  WACC - g] / (1+WACC)³

Current value from operations = 20 / (1+0.1)  +  25 / (1+0.1)²  +  30 / (1+0.1)³  +  [30 * (1+0.05) / (0.1 - 0.05)] / (1+0.1)³

Current value from operations = $534.71 million

8 0
3 years ago
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Making decisions and taking actions to achieve a superior fit between the organization and its environment is.
MaRussiya [10]

Answer:

Making decisions and taking actions to achieve a superior fit between the organization and its environment is. strategic management

What is strategic management?

a process that uses vision, goals and objectives, internal, and external analysis, and implementation levers that can be used to help formulate and implement strategy.

8 0
2 years ago
"A customer buys a Brokered CD for $100,000. Upon receipt of his next account statement, the customer sees that the market value
Dmitry_Shevchenko [17]

Answer:

market rates have increased

Explanation:

Bonds as well as brokered CDs are priced depending on the market's interest rates for similar investments. For example, the CD pays a 3% interest, and then the market rate increases to 3.1% (or more), the CD's price will decrease. On the other hand, if the market rates decrease to 2.9% (or less), the CD's price will increase.

8 0
3 years ago
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