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Soloha48 [4]
2 years ago
10

Grandiose Growth has a dividend growth rate of 20%. The discount rate is 15%. The end-of-year dividend will be $3 per share. Wha

t is the present value of the dividend to be paid in year 1? Year 2? Year 3?
Business
1 answer:
11111nata11111 [884]2 years ago
5 0

Answer:

The present value of dividend to be paid at the end of year 1, year 2, and year 3 are $2.60, $2.95, and $2.84 respectively.

Explanation:

The end of the year dividend is $3 per share.

The dividend growth rate is 20%.

The discount rate is 15%.

PV of dividend to be paid at the end of year 1

= \frac{end\ of\ the\ year\ dividend}{(1+discount\ rate)^n}

= \frac{3}{(1 + .15)^1}

= \frac{3}{1.15}

=$2.60

PV of dividend to be paid at the end of year 2

=\frac{end\ of\ the\ year\ dividend}{(1 + discount\ rate)^n}

=\frac{3\times (1+.20)}{(1+.15)^2}

=\frac{3.60}{1.322}

=$2.72

PV of dividend to be paid at the end of year 3

=\frac{end\ of\ the\ year\ dividend}{(1 + discount\ rate)^n}

=\frac{3\times (1+.20)^2}{(1+.15)^3}

=\frac{4.32}{1.52}

=$2.84

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Dennis, who consumes only grilled chicken sandwiches and salads with low-fat dressing, has a weekly income of $100 to spend on f
Kitty [74]

Answer:

1. buy more salads and fewer sandwiches.

Explanation:

As we know that

\textup{MU}_{S}=\textup{Marginal utility of Sadwitches}

\textup{MU}_{SA}=\textup{Marginal utility of Salad}

\textup{P}_{S}=\textup{Price of Sanswithches}

\textup{P}_{SA}=\textup{Price of Salads}

Therefore

\frac{MU_{S}}{MU_{SA}}=\frac{P_{S}}{P_{SA}}

\frac{MU_{S}}{MU_{SA}}=\frac{\$40}{\$40}=1

Now the price ratio is

\frac{P_{S}}{P_{SA}}=\frac{\$3}{\$2}=1.5

It is probable if you rising marginal utility numbering and reduce denominator marginal utility. If you reduce their intake, the MU of a food item will raise. Such decrease in the composition would make the quantity of the food element scarce. And its usefulness goes up. The Numerator here is sandwich MU. And to increase their marginal utility, you can reduce sandwich consumption.

Salad should need just the reverse. You raise salad intake so the MU reduces. Therefore you have to eat more salads and less chicken sandwiches to maximise the utility. So, salad is replaced by sandwiches for chicken.

5 0
2 years ago
An ATM with a service fee of $3 is used by a person 200 times in a year. What would be the future value in 5 years (use a 2 perc
Eddi Din [679]

Answer:

The future value in 5 years is $3,184.87  

Explanation:

The figure is arrived by calculating the future of the yearly total service of $600($3*200) by using applicable annuity factor for each of the years from year 1 to 5.

The annuity factor for each year is calculated as (1+r)^n, where r is the rate of return of 2% and the n the year in which the service fee relates to.

Kindly find attached for detailed computations.

Download xlsx
6 0
3 years ago
Read 2 more answers
Assuming that Borland retires shares it reacquires, record the appropriate journal entry for each of the following transactions:
KiRa [710]

Answer:

The first transaction is that 10 million shares are being reacquired at 32.50 per share so we need to find out how much cash is spent to buy these shares.

32.5*10 million = $325 million

We will debit treasury stock and credit cash because the company is buying shares from the market and paying cash

The second transaction is reacquiring 10 million shares at 36 per share so we need to find how much cash is spent

10 million *36= $360 million

We will debit treasury stock and credit cash because the company is buying shares from the market and paying cash

In the third transaction 1 million shares are being sold for 42, so need to figure out how much cash the company gets from the transaction

42* 1 million = 42 million

We will debit cash and credit common stock as the company is issuing shares to the market and getting cash for it

In the fourth transaction 1 million shares are being sold for 36, so need to figure out how much cash the company gets from the transaction

36* 1 million = 36 million

We will debit cash and credit common stock as the company is issuing shares to the market and getting cash for it

Journal entries

                                                            Debit                          Credit

Treasury stock                                      325 million

Cash                                                                                        325 million

Treasury stock                                      360 million                  

Cash                                                                                        360 million

Cash                                                        42 million

Common stock                                                                          42 million

Cash                                                        36 million

Common stock                                                                           36 million                

Explanation:        

5 0
2 years ago
4.The inflation rate in the U.S. is 3%, while the inflation rate in Japan is 1.5%. The current exchange rate is $1 equal to 105
Nana76 [90]

Answer:

103.4709          

Explanation:

The computation is shown below:

Given that

U.S inflation rate = 3%

Japan inflation rate = 1.5%

Current exchange rate = 105

Now the new exchange rate for the yen is

= Current exchange rate × (1 + Japan inflation rate) ÷ (1 + U.S inflation rate)

= 105 × (1 + 1.5%) ÷ (1 + 3%)

= 105 × (1.015 ÷ 1.03)

= 105 × 0.985436893

= 103.4709          

5 0
3 years ago
TwitterMe, Inc., is a new company and currently has negative earnings. The company’s sales are $2.1 million and there are 130,00
Paladinen [302]

Answer:

a. $69.46

b. 58.15

Explanation:

a. Price = Benchmark PS ratio × Sales per share

<u>Sales per Share</u>

=  Sales / Shares outstanding

= 2,100,000/130,000

= $16.15

Price = 4.3 * 16.15

Price = $69.46

b. PS Ratio is 3.6

Price = Benchmark PS ratio × Sales per share

Price = 3.6 * 16.15

Price = $58.15

7 0
2 years ago
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