Answer:
$38.78
Explanation:
The formula to compute the share price in one year is shown below:
Price of a stock = (Next year dividend) ÷ (Required rate of stock return - growth rate)
where,
Price of the stock = Next year dividend ÷ (Risk free rate + beta × (Market return - Risk free rate) - Dividend growth rate)
$35 = $0.80 ÷ (5.5% + 1.2 × (12% - 5.5%) - g)
So after solving this
The growth rate is 11.01%
Now the share price after one year is
= 0.80 × (1 + 11.01%) ÷ (13.3% - 11.01%)
= $88.81 ÷ 2.29%
= $38.78
Since your town was impacted in a negative way by the flooding the demand for home improvement items will be high. When demand is high and supply is low it can drive up prices. Most stores would definitely take advantage of this supply and demand case because they could turn a bigger profit. That would be a motivating reason for some people or companies.
As for me personally, I would not raise prices in my business because I feel that is taking advantage of people in a bad situation. You know that they are going to need to supplies to help them fix flood damage and they will have no option but to buy the needed materials. However, if you raise prices it could backfire on you and they may go somewhere else to get the materials needed instead of shopping with you.
Answer:, $27 per share
Explanation:
GIVEN THE FOLLOWING ;
Original Cost of stock per share = $26
Date purchased = 9th June
12th June, Stock sold at = $23 per share
On 30th June, Repurchasement cost = $24 per share.
Loss on stock = original cost of stock per share - sales price of stock
Loss on stock = $26 - $23 = $3
The customer in this case sold his stock at a loss and repurchases a similar stock within 30 days. This is called a washout sale and in this case, the loss incurred on the sold stock is added to the cost basis of the new stock purchased.
Repurchased price = $24
Loss on sold stock = $3 per share
Therefore, customer cost basis =
$24 + $3 =$27 per share.
