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
Ad libitum [116K]
3 years ago
7

The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporat

ion has a beta coefficient of 1.2. Xyrong pays out 40% of its earnings in dividends, and the latest earnings announced were $10 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 18% per year on all reinvested earnings forever.
A) What is the intrinsic value of a share of Xyrong stock?


B) If the market price of a share is currently $103, and you expect the market price to be equal to the intrinsic value one year from now, what is your expected one-year holding-period return on Xyrong stock?
Business
1 answer:
Reptile [31]3 years ago
5 0

Answer:

A)

risk free rate = 8%

market rate = 15%

Xyrong's beta = 1.2

pays 40% of income in dividends

latest EPS = $10

ROE = 18%

k = 8% + (1.2 x 7%) = 16.4%

g = ROE x (1 - 40%) = 10.8%

div1 = [(40% x $10) x (1 + g)] = $4 x 1.108 = $4.432

stock price = $4.432 / (16.4% - 10.8%) = $79.14

B)

div0 = $4

div1 = $4.432

price0 = $103

price1 = $79.14 x (1 + g) = $79.14 x 1.108 = $87.69

holding period return = ($4.43 + $87.69 - $103) / $103] = -0.1056 or -10.56%

You might be interested in
Matt's retail store offers all products at $2 less than its competitors. The store never runs promotional campaigns or offers sp
olya-2409 [2.1K]

Answer:

5) everyday low

Explanation:

An everyday low pricing policy (or strategy) refers to simply selling your products at a cheaper price than your competitors.

For example, bargain stores usually sell their products at a lower cost than the competition, Walmart, Target and Kmart are supposed to be bargain or discount stores. Another common type of retail store that uses this pricing strategy are outlet stores, specially clothing outlet stores.

8 0
3 years ago
A rectangular floor measures $a$ feet by $b$ feet, where $a$ and $b$ are positive integers with $b > a$. An artist paints a r
DENIUS [597]

The number of possibilities that are there for the ordered pair is 2.

<h3>Calculation and Parameters
</h3>

Because the unpainted part of the floor covers 1/2 of the area, then the painted rectangle covers 1/2 of the area as well.

Given that the border width is 1 foot, the dimensions of the rectangle are a-2 by b-2.

Making an equation:

ab= 2((a-2)(b-2))

ab= 2ab-4a-4b+8

ab-4a-4b+8=0

If we apply Simon's Favorite Factoring Trick,

ab-4a-4b+16= 8

(a-4)(b-4)= 8

Since b > a, then we have the possibilities

(a-4) = 1 and (b-4) = 8, or (a-4) = 2 and (b-4) = 4.

(5, 12) or (6,8) which gives us 2 possibilities.

Read more about possibilities here:

brainly.com/question/25870256

#SPJ1

8 0
2 years ago
Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve and total cost curve
andrey2020 [161]

Answer:

22

Explanation:

A monopoly will maximize profit at MR = MC ( marginal revenue = marginal cost)72

MR =MC

40 -0.5 Q = 4

-0.5 Q = 4 - 40 = -36

Q = -36 / -0.5 = 72

The price of the her product

Q = 160 - 4P

4P =  160 - 72 = 88

P = 88 / 4 = 22

4 0
3 years ago
Purposely understaffing customs offices to cause time delays, requiring special licenses that take a long time to obtain, and re
crimeas [40]

Answer: B Administrative delays

Explanation:

Administrative delay means: any Governmental Entity’s failure to act within a reasonable time, in keeping with standard practices for such Governmental Entity, or within the time contemplated in the Interagency Cooperation Agreement, the Planning Cooperation Agreement, any of the Land Acquisition Agreements, the Tax Allocation Agreement, any Acquisition and Reimbursement Agreement.

7 0
3 years ago
Read 2 more answers
A company that adapts its product features for an international market is pursuing one of the three principle strategic options:
sergij07 [2.7K]

Answer: A company that adapts its product features for an international market is pursuing "B. A global strategy of offering products to a worldwide market.".

Explanation: A global business strategy implies participation in the world market and requires adaptation before applying it.

3 0
2 years ago
Other questions:
  • Now, write your final draft of your paragraph. To provide a clear introduction, thoughtful examples, and a clear conclusion, you
    12·2 answers
  • Consider the market for dog walkers that is currently in equilibrium. If the government institutes a minimum wage that is below
    6·1 answer
  • American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construc
    10·1 answer
  • 1. What was Karl Marx’s basic premise and belief?
    15·1 answer
  • Craftsman Corporation began operations on January 1, 2020 when $200,000 was invested by shareholders of the company. On March 1,
    7·1 answer
  • Discuss why it is important for company managers to understand and use social capital knowledge to help build social ""ties"" am
    12·1 answer
  • AS/AD model - If there is a decrease in Aggregate Income and Spending in this economy, then the equilibrium could shift from ___
    10·1 answer
  • In the LMN partnership, Lynn's capital is $60,000, Marty's is $80,000, and Nancy's is $70,000. They share income in a 4:3:3 rati
    5·1 answer
  • Suggest strategies to succeed in outsourcing its HR services
    7·1 answer
  • What is a business opportunity?
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!