1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Roman55 [17]
3 years ago
15

expecting a period of intense growth and has decided to retain more of its earnings to help finance that growth. As a result, it

is going to reduce its annual dividend by 10% a year for the next three years. After that, it will maintain a constant dividend of $.70 a share. Last month, the company paid $1.80 per share. What is the value of this stock if the required rate of return is 13%
Business
1 answer:
Daniel [21]3 years ago
3 0

Answer:

The price of the stock is $7.216

Explanation:

The price of the stock will be calculate the using the two stage dividend Gordon growth model. In the first stage, the dividend is falling a constant percentage for 3 years. After that the growth rate is zero. Thus the formula for the price of such a stock will be,

P0 = D1 / (1+r)  +  D2 / (1+r)²  +  D3 / (1+r)³ + [D4 / r] / (1+r)^4

P0 = [1.8 * (1-0.1)] / (1+0.13) + [1.8 * (1-0.1)²] / (1+0.13)² + [1.8 * (1-0.1)³] / (1+0.13)³ + (0.7 / 0.13) / (1+0.13)^3

P0 = $7.216

You might be interested in
Complete the following table by indicating whether or not each scenario is an example of price discrimination.
Monica [59]

Answer: yes; no

Explanation:

Price discrimination is an exploitative  selling strategy that  sellers use to try to charge their customers on  different prices for the same product or service.

Last-minute "rush" tickets can be purchased for most Broadway theater shows at a discounted price. They are typically distributed via lottery or on a first-come, first-served basis a few hours before the show. Assume that the theater in question does not hold seats in reserve for this purpose, but rather offers rush tickets only for seats not sold before the day of the performance......... YES PRICE DISCRIMINATION OCCURS

---.>In this case, the groups are  segmented into those who paid earlier at normal price and those who paid in relation to the rush at discounted price, A case  price discrimination arises because the  people who  have paid more than others for a same show, would not be reserved seats which means that  the product was same for the two type of consumers but not the same price

Horizon Wireless offers various features "à la carte" that a customer may add to his or her calling plan, such as a text messaging package, a data package, and an Internet package. NO PRICE DISCRIMINATION

---->This is because Because Horizon Wireless is offering the different features  with  a la carte pricing, where every customer is subject to the same pricing irrespective  of his or her calling plan.

If the price of a data  package or internet  were different for a customer with a more expensive calling plan, then Horizon Wireless might be attempting to identify thier different consumer types and try to  exploit the differences in their willingness to pay.

8 0
3 years ago
Which of the following statments about government regulation of business is true?
BigorU [14]

Answer:

A

Explanation:

Just took the quiz

6 0
3 years ago
At December 31, Meyer Company had 500,000 shares of common stock issued and outstanding, 400,000 of which had been issued and ou
kicyunya [14]

Answer:

$1.2

Explanation:

The computation of earning per common share is shown below:

Earning per share = (Net income) ÷ (Number of shares)

where,

Net income = $510,000

And, the number of shares = $400,000 + $100,000 × (3 months ÷ 12 months)

= $400,000 + $25,000

= $425,000

The 3 months is calculated from October 1 to December 31

Now put these values to the above formula  

So, the value would equal to

= $510,000 ÷ $425,000

= $1.2

6 0
3 years ago
A stock has an expected return of 16.1 percent, the risk-free rate is 6.45 percent, and the market risk premium is 7.2 percent.
DiKsa [7]

Answer:

the beta of the stock is 1.34

Explanation:

The calculation of the beta of the stock should be

As we know that

Expected rate of return = Risk free rate + beta × market risk premium

16.1 = 6.45% + beta × 7.2%

16.1% - 6.45% = beta × 7.2%

9.65% = beta × 7.2%

So, the beta should be

= 9.65% ÷ 7.2%

= 1.34

Hence, the beta of the stock is 1.34

4 0
3 years ago
In 100 words, identify the IS components needed for SSE, and explain them in terms of SSE.
Sever21 [200]

Ill get banned if we write all that but i can make it on google slides

3 0
3 years ago
Read 2 more answers
Other questions:
  • Which one of the following best represents the transaction motive for holding cash? A. Buying extra inventory in response to an
    5·1 answer
  • Bulluck Corporation makes a product with the following standard costs: Standard Quantity or HoursStandard Price or Rate Direct m
    7·1 answer
  • Which is an example of an ethical dilemma?
    13·2 answers
  • One thirds of the checking accounts at the community bank earns interest. If 2,500 accounts are of this type, how many total acc
    5·1 answer
  • What is a mission statement?
    5·2 answers
  • A cash flow statement can help you develop and determine budget categories.
    13·1 answer
  • Oriole Company reports the following for the month of June. Date Explanation Units Unit Cost Total Cost June 1 Inventory 390 $6
    11·1 answer
  • _______ is a political strategy for managers to exercise power unobtrusively. Controlling uncertainty Being irreplaceable Genera
    7·1 answer
  • The concept of productivity can be reduced to this practical rule: The more you can produce (output) in any period of time (inpu
    11·1 answer
  • On May 16, Thorne Co. declares a $0.40 dividend to be paid on April 5. Thorne has 2,060,000 shares of common stock issued and ou
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!