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
love history [14]
3 years ago
7

Software Sales Supply is expected to pay its first annual dividend of $1.10 per share in Year 3. Starting in Year 6, the company

plans to increase the dividend by 3.2 percent per year. What is the value of this stock today, Year 0, at a required return of 13.1 percent?
Business
1 answer:
Andru [333]3 years ago
8 0

Explanation:

Let the dividend paid in Year n be Dn

Given, D3 = $1.10

D4 = $1.10

D5 = $1.10

Growth in dividend from Year 6 = g = 3.2%

D6 = D5(1+g) = 1.10(1+0.032) = $1.135

Required Return = r = 13.1%

According to Gordon's Growth model,

P5 = D6/(r - g) = 1.135/(0.131 - 0.032) = $11.464

Present Value of the stock = P0 = D3/(1+r)3 + D4/(1+r)4 + D5/(1+r)5 + P5/(1+r)5

= 1.10/(1+0.131)3 + 1.10/(1+0.131)4 + 1.10/(1+0.131)5 + 11.464/(1+0.131)5

= <u>$8.22</u>

You might be interested in
If the minimum attractive rate of return is 7%, which alternative should be chosen assuming identical replacement (like kind exc
ira [324]

Answer:

The alternative that should be chosen assuming identical replacement is:

Alternative B.

Explanation:

a) Data and Calculations:

Alternatives:

                                                A            B

First Cost                           $5,000     $9,200

Uniform Annual Benefit     $1,750      $1,850

Useful life, in years                4              8

Rate of return                       7%            7%

Annuity factor                   3.387          5.971

Present value of annuity $5,927.25 $11,046.35

Net cash flow                 $927.25     $1,846.35

b) Alternative B yields a higher return than Alternative A.  Since the two alternatives are based on the same rate of return, Alternative B will bring in a higher annual benefit, even when discounted to the present value.

7 0
3 years ago
How do we advice company on how to support each of it`s S.B.U
BabaBlast [244]
The company's next task is to determine what objective, strategy and budget to assign to each SBU. Four strategies can be pursued: build, hold harvest, or divest.
4 0
2 years ago
Liam is a computer system analyst and is looking to change to a company that offers more opportunities for advancement. He has j
Katyanochek1 [597]

Answer:

C

Explanation:

Job 1

Annual Income+ Benefits- (annual housing & utility cost)

78,000+4,000-( 1,350*12)= 65,800

Job 2

Annual Income+ Benefits- (annual housing & utility cost)

100,000+2,500-( 3,150*12)=  64,700

Therefore, job 1 is a better choice

5 0
4 years ago
Read 2 more answers
Read the scenario, and answer the questions. You are a project manager for a specialty sports equipment manufacturer. A critical
GarryVolchara [31]

Answer:

Mentally outline your conversation

Explanation:

Since in the question it is mentioned that Gwen who is in a design team is unprofessional and even rude to her coworkers. Due to this, she missed two deadlines. Now you have to address this problem so here the first step is to outline your conversation in a mental way so that the chances of solving the problem is high

Therefore the same is to be considered

3 0
3 years ago
Wolery Inc. has provided the following data concerning one of the products in its standard cost system. Inputs Standard Quantity
nadezda [96]

Answer: The labor efficiency variance for the month is closest to: $2576

Explanation:

Given:

Actual output 8,800 units

Actual direct labor-hours 1,610 hours

Actual direct labor rate $ 23.30 per hour

The labor efficiency variance for the month is computed as :

The labor rate variance = Actual hours×(Actual rate - Standard rate)

=1610 ×($23.30-$21.70)

=$2576

7 0
3 years ago
Read 2 more answers
Other questions:
  • Anemployer may choose to match money employees invest in a
    5·1 answer
  • Effective lessons planning helps early childhood teachers
    10·1 answer
  • Why did the safavid empire decline so quickly ?
    10·1 answer
  • Which one of the following about The interest-rate effect is correct? A. The interest-rate effect suggests that a decrease in th
    5·1 answer
  • A service contract for a video projection system costs $80 a year. You expect to use the system for four years. Instead of buyin
    8·1 answer
  • Does anyone know anything on accounting????
    13·1 answer
  • A. He should utilize lean manufacturing.
    7·1 answer
  • La Tortilla is the only producer of tortillas in Santa Teresa. The firm produces 10,000 tortillas each day and has the capacity
    8·1 answer
  • The Wall Street Journal reported the following spot and forward rates for the Swiss franc ($/SF):Spot...........................
    14·1 answer
  • The fed’s efforts to manage interest rates and thus the availability of credit is known as?
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!