The annual Dividend (D0) = $1.10
D1 = $1.10 * (1+0.21)^1 = $1.33
D2 = $1.10* (1+0.21)^2 = $1.61
D3 = $1.10* (1+0.21)^3 = $1.95
D4 = $1.10 * (1+0.21)^4 = $2.36
D5 = $1.10*(1+0.05) = $2.48
Now the price of the stock at the end of the fourth year (P4) = $2.48/(0.085-0.05)
P4 = $2.48 / (0.035)
P4 = $70.85
Now the Price of the stock (P0) = $1.33/(1+0.085) + $1.61/(1+0.085)^2 +$1.95/(1+0.085)^3 + $2.36/(1+0.085)^4 + $70.86/(1+0.085)^4
Price of the stock (P0) = $1.23 +$1.37 + $1.53 + $1.70 + $51.13
Price of the stock (P0) = $56.86
Therefore the correct option is d, $56.86
Answer:
Connecting the world over time
Explanation:
Is the process of interaction of businesses and exchanges worldwide.
Answer and Explanation:
a. The computation of depreciation for each of the first two years by the straight-line method is shown below:-
Depreciation
= (Assets cost - Salvage value) ÷ Useful life
= ($171,000 - 0) ÷ 25
= $6,840
For First year = $6,840
For Second year = $6,840
It would be the same for the remaining useful life
b. The computation of depreciation for each of the first two years by the double-declining-balance method is shown below:-
First we have to determine the depreciation rate which is shown below:
= One ÷ useful life
= 1 ÷ 25
= 4%
Now the rate is double So, 8%
In year 1, the original cost is $171,000, so the depreciation is $13,680 after applying the 8% depreciation rate
And, in year 2, the ($171,000 - $13,680) × 8% = $12,585.60
False.
If the price of a product goes up by 10% and the quantity demanded goes up by 20% the product is a GIFFEN GOOD.
An inferior good is a good that decreases in demand if income increases. These are the goods that people opt not to buy when their purchasing power increases.
