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3 years ago

Stocks that don't pay dividends yet

Business

1 answer:

mariarad [96]3 years ago

5 0

Answer:

horizon value at year 5 = $94.3444

current intrinsic intrinsic value P₀ = $47.73

Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is and Goodwin's capital gains yield is <u>0(it pays no dividends)</u>.

Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement:

Goodwin's investment opportunities are poor.

Is this statement a possible explanation for why the firm hasn't paid a dividend yet?

<u>B. False</u>

Generally companies that are experiencing a rapid growth do not pay dividends, because they need all the cash that they can use to finance their expansion. Sometimes mature companies that have a steady growth rate will also choose not to pay dividends because they consider themselves as solid investments and not paying dividends allows them to grow more and should increase stockholders' wealth more.

Explanation:

D₃ = $5.50

D₄ = $7.073

D₅ = $9.096

D₆ = $9.642 (and a constant growth rate of 4.38%

Re = 14.60%

horizon value at year 5 = $9.642 / (14.6% - 4.38%) = $94.3444

intrinsic value P₀ = $94.3444 / 1.146⁵ = $47.73

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The number of years in which the money is in the account is 6 years.

<h3>What is simple interest?</h3>

Simple interest denotes the amount of payment that is received or paid by a person in return for anything pledged or given a loan.

The interest computed on the principal amount for a specified duration of time and rate of interest is called simple interest.

The formula of simple interest:

$\text{SI}= \text{P}\times r \times t$

Where, (P) stands for principal, (r) for interest rate, and (t) is for the time period.

<u>Computation </u><u>of a number of years:</u>

According to the given information,

P=$500,

r=7.5%,

t=?

SI= $225

Now, substitute the given values in the above formula, we have:

$\text{SI}= \text{P}\times r \times t\\\\\$225=\$500\times\ 7.5\%\times t\\\\t= 6 \text{Years}$

Therefore, the number of years is 6 years.

To learn more about the simple interest, refer to:

brainly.com/question/2793278

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2 years ago

Trade between individuals and between nations leads to: Trade between individuals and between nations leads to: higher product p

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Answer:

The correct answer is B.

Explanation:

Trade between individuals and between nations leads to: Increased Specialization

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2 years ago

If a company spends $20 million to install new footwear-making equipment with capacity to produce 1 million pairs of athletic fo

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Answer: 10% or $2,000,000

Explanation:

Seeing as no figures were produced, we will have to do this ourselves.

We will make assumptions which include the following,

Life of the equipment = 10 Years

Salvage value = 0

Those are our 2 assumptions.

In that case then,

The Annual Depreciation will be,

Depreciation = (Cost of equipment - Estimated salvage value) / Estimated useful life

= (20 - 0) / 10

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Seeing as 2 million is,

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That would mean that annual depreciation costs at that facility will rise by $2 million or 10%.

If you need any clarification do react or comment.

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3 years ago

Mr. Wise is retiring In 25 years He would like to accumulate $1,000.000 for his retirement fund by then He plans make equal mont

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Answer:

$532.24

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Future value of annuity=R[((1+i)^n-1)/i]

In the given scenario:

Future value of annuity=amount after 25 years=$1,000.000

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3 years ago

What are examples of the substitution effect and/or real-income effect?

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The options available are:

A. After subscription prices in the cable TV market fall, customers also purchase higher-speed Internet service.

B. Julie usually buys generic cereal because it is cheaper. One day she notices one of the brand-name products falls in price, so she decides to buy it.

C. Movie ticket prices plummet to $1, so you cancel your Netflix subscription in favor of attending movies at the theater. In addition, the cheap tickets leave you with extra money for concessions.

D. Kyle notices the cost of premium peanut butter has fallen. He considers this and then purchases less bread.

Answer:

The answers are A, B, and C

Explanation:

The options available are:

Option A. "After subscription prices in the cable TV market fall, customers also purchase higher-speed Internet service" is a perfect example of the real income effect.

Option B. "Julie usually buys generic cereal because it is cheaper. One day she notices one of the brand-name products falls in price, so she decides to buy it," is an example of the substitution effect.

While Option C. "Movie ticket prices plummet to $1, so you cancel your Netflix subscription in favor of attending movies at the theater. In addition, the cheap tickets leave you with extra money for concessions, " is an example of both the substitution and real-income effects

However, option D example "Kyle notices the cost of premium peanut butter has fallen. He considers this and then purchases less bread, " does not fit any of the substitution and real-income effects.

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