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vodomira [7]
4 years ago
15

Suppose you plan to hold a stock for one year. You expect that, in one year, it will sell for $30 and pay a dividend of $3 per s

hare. If your required return on equity is 10%, what is the most you should be willing to pay for the share today?
Business
1 answer:
Mariana [72]4 years ago
4 0

Answer:

Today's price = = $30

Explanation:

The question requires the most price one is willing to pay today for the following

a) a stock that will sell for $30 in 1 year

b) Payout a dividend of $3

3) with a return rate on equity of 10%

To calculate the price for today or the present value,

we add the dividend expected to the selling price as follows

$3 + $30 = $33

The rate = 10% and the period = 1 Year

Present value = Future Value / (1+r)∧n

= 33/ 1.1

= $30

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3 years ago
Kingbird Company has five employees participating in its defined benefit pension plan. Expected years of future service for thes
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Answer:

Total number of years remaining for employees = 3 + 4 + 5 + 6 + 6 =  24 years.

Projected benefit of $88,560.

Year                                                                           Annual Amortization

2020    88,560 * 5/24                                                      $‭18,450‬

2021      88,560 * 5/24                                                     $‭18,450‬

2022      88,560 * 5/24                                                    $‭18,450‬

2023      88,560 * 4/24                                                    $‭14,760‬

2024      88,560 * 3/24                                                    $‭11,070‬

2025     88,560 * 2/24                                                     $‭7,380‬

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Every year the projected benefit is amortized by the number of employees still working divided by the total number of years for all the employees.                                                                      

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