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Ne4ueva [31]
3 years ago
10

Praetorian Industries will pay a dividend of $2.50 per share this year and has an equity cost ofcapital of 8%. Praetorianʹs stoc

k is currently trading at $84 per share. By comparing Praetorianwith similar firms, an investor expects that its dividends will grow by up to 5% per year. Whatis the best next step that the investor should take regarding Praetorianʹs stock?A) Sell any Praetorian stock that she owns.B) Short Praetorianʹs stock.C) Revise Praetorianʹs equity cost of capital.D) Revise her estimate of Praetorianʹs dividend growth
Business
1 answer:
Alenkinab [10]3 years ago
6 0

Answer:

The best next step that the investor should take regarding Praetorianʹs stock is C. Revise her estimate of Praetorian's Dividend Growth

Explanation:

Consider the following calculations

Price = D (1+g)/ (r-g) = 2.5*(1.05)/(0.08-0.05) = $ 87.5

Hence, the stock is underpriced at $ 84 per share .

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3 0
3 years ago
What is the difference between an increase in supply and an increase in quantity supplied?.
lyudmila [28]

Answer:

<u>An 'increase in supply' means the supply curve has shifted to the right while an 'increase in quantity supplied' refers to a movement along a given supply curve in response to an increase in price.</u>

Explanation:

7 0
2 years ago
What is the good that you have selected?
iogann1982 [59]

Answer:

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Explanation:

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6 0
3 years ago
Which of the following best describes the current ratio?
-Dominant- [34]

Answer:

c. liquidity ratio

Explanation:

Liquidity means having cash or access to cash readily available to meet obligations to make  payments.

For the purpose of ratio analysis, liquidity is measured on the assumption that the only sources of

cash available are:

Cash in hand or in the bank, plus

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It is also assumed that the only immediate payment obligations faced by the entity are its current  liabilities.

There are two ratios for measuring liquidity:

Current ratio

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8 0
3 years ago
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The price and quantity determined in a market when the supply equals the demand, the market is in the state of
astra-53 [7]

Answer:

Market equilibrium

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