Answer:
a.
r = 0.06697 or 6.697% rounded off to 6.70%
b.
r = 0.1202 or 12.02%
Explanation:
a.
Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,
P0 = D0 * (1+g) / (r - g)
Where,
- D0 * (1+g) is dividend expected for the next period /year
- r is the required rate of return or cost of equity
Plugging in the values for P0, D0 and g in the formula, we can calculate the value of r to be,
76 = 0.5 * (1+0.06) / (r - 0.06)
76 * (r - 0.06) = 0.53
76r - 4.56 = 0.53
76r = 0.53 + 4.56
r = 5.09 / 76
r = 0.06697 or 6.697% rounded off to 6.70%
.
Using the CAPM, we can calculate the required/expected rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.
The formula for required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate
rM is the market return
r = 0.059 + 1.2 * (0.11 - 0.059)
r = 0.1202 or 12.02%
Answer:
$80,809.09
Explanation:
Present value of the cash flows = ∑(Cash flow × Present value factor)
Present value factor = (1 + r)⁻ⁿ
Here,
r is the discount rate = 15.25% = 0.1525
n is the year of cash flow
thus,
Year n Cash flow PVF Present value
Year 1 1 $48,000 0.86768 $41,648.59
Year 2 2 $39,000 0.75287 $29,361.80
Year 3 3 $15,000 0.65325 $9,798.70
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Present value of the project = $41,648.59 + $29,361.80 + $9,798.70
= $80,809.09
Offer is a definite undertaking or proposal made by one person to another indicating a willingness to enter into a contract. The offer must be communicated to the offeree and must be <span>sufficiently definite and certain.</span>
An offer to enter into a contract can be terminated by lapse of time, r<span>evocation ,
counteroffer, rejection, death or incompetency of the offeror or offeree, destruction of the subject. </span>
Explanation:
people normally take abortion into a choice i totally agree.
labor is a serious matter that takes in some people's days
Answer:
Earnings per share = $6.5
Explanation:
<em>Earning per share (EPS)</em><em> is calculated as the the value of earning available to shareholders divided by the number of shares outstanding. Earnings available to ordinary shareholders is the residual earnings after all other priority claims of other investors have been settled.</em>
Earnings per share (EPS)
= Total earnings available to ordinary shareholders / Number of shares outstanding
= $13,000,000/2,000,000 units
=$6.5
The amount of earnings per share generated by Nana Inc. =$6.5
