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Nat2105 [25]
3 years ago
9

Each of two stocks, A and B, are expected to pay a dividend of $5 in the upcoming year. The expected growth rate of dividends is

10% for both stocks. You require a rate of return of 11% on stock A and a return of 20% on stock B. The intrinsic value of stock A
Business
1 answer:
Rama09 [41]3 years ago
4 0

Answer:

The intrinsic value of Stock A is 500

Explanation:

According to the DDM method the formula for calculating the intrinsic value of a stock is

Upcoming Dividend/Required rate of return - Growth rate of stock.

Upcoming Dividend of Stock A= 5

Required rate of return on Stock A= 11% or 0.11

Growth rate on stock A= 10% or 0.10

Intrinsic value of stock A=

5/(0.11-0.10)=5/0.01=500

The intrinsic value of Stock A is 500

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Carl has a checking account. He'd like to know right away when his balance gets lower than $50. What should Carl do?
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He should set up an alert.
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If an agreement does not contain an arbitration clause, the parties may, nevertheless, agree to arbitration by entering into a _
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Entering into an Alternative Dispute Resolution (ADR) agreement.

Alternative Dispute Resolution is very much akin to arbitration in which the parties that are agreeing to surrender their rights to access the judicial system in a civil court that enables a party to bring a lawsuit against another party that is in said agreement.
7 0
3 years ago
Using a dividend discount model, what is the value of a stock that pays an annual dividend of $5 that is not expected to grow, a
Alenkasestr [34]

Answer:

a. <u>Value of the stock without growth rate</u>

= D1 / (r - g)

= $5 / (10% - 0)

= $5 / 10%

= $5 / 0.10

= $50

b. <u>Value of the stock with growth rate</u>

= D1 / (r - g)

= $5 / (10% - 5%)

= $5 / 5%

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= $100

5 0
2 years ago
Nathan Herrmann has completed the basic format to be used in preparing the statement of cash flows (indirect method) for CEO Con
yarga [219]

Answer:

Ending cash balance is -$41,000.

Explanation:

This can be prepared as follows:

Nathan Herrmann

Cash Flow Statement

for the year ended ...

<u>Details                                                                   $                      $             </u>

Net income                                                      69,000  

Adjustment to reconcile net income    

Depreciation expense                                     13,000  

Loss on sale of land                                         12,000  

(Increase) decrease in current assets

Increase in inventory                                     (35,000)

Increase in prepaid rent                                  (7,500)

Increase in accounts receivable                   (47,000)

Increase (decrease) in current liabilities:  

Increase in accounts payable                      <u>    15,000  </u>

Net cash from operating activities                                         19,500

<u>Cash flows from investing activities:  </u>

Cash received from the sale of land                7,500  

Purchase of equipment                              <u> (229,000) </u>

Net cash flows from Investing activities                            (221,500)

<u>Cash flows from financing activities:   </u>

Payment of dividends                                      (31,000)

Repayment of notes payable                         (49,000)

Issuance of common stock                            <u> 241,000  </u>

Net cash from financing activities                                        <u>  161,000  </u>

Increase / (Decrease) in cash                                                   (41,000)

Beginning cash balance                                                         <u>            -    </u>

Ending cash balance                                                              <u>   (41,000) </u>

7 0
3 years ago
the price index was 170 in the first year, 180 in the second year, and 195 in the third year. the inflation rate was about a. 5.
OlgaM077 [116]

The inflation rate was 5.9 percent between the first and second years, and 8.3 percent between the second and third years. Hence, A is the correct option.

When we compare the values for any two periods or locations it reveals the average change in prices between the two periods or the average difference in prices between locations, the price index is a measure of relative price changes.

Take the Market Basket's price for the interest-bearing year, divide it by the Market Basket's price for the base year, then multiply the result by 100 to get the Price Index.

Price indices typically pick a base year and set that year's index value to 100. As a proportion of that base year, every other year is expressed. Let 2000 serve as the basis year in this illustration: In 2000, the index's initial value was $2.50; since $2.50/$2.50 = 100%, the index's current value is 100.

To know more about price index: brainly.com/question/27886596

#SPJ4

8 0
1 year ago
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