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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

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victus00 [196]

false

hope this helps :)


8 0
3 years ago
What is the percentage increase in the net worth of your brokerage account if the price of XTel immediately changes to (a) $44;
gayaneshka [121]

Suppose that Intel currently is selling at $40 per share. You buy 500 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%.

What is the percentage increase in the net worth of your brokerage account if the price of Intel immediately changes to (a) $44; (b) $40; (c) $36?

Answer:

Initial worth of brokerage account = 500 × $40 = $20,000

a). if the price changes to $44, then:

worth of brokerage account becomes = 500 × $44 = $22,000

∴ percentage increase = (22,000 - 20,000) / 20,000 = 10% increase.

b). if the price changes to $40, then:

worth of brokerage account becomes = 500 × $40 = $20,000

∴ percentage increase = (20,000 - 20,000) / 20,000 = 0 or no increase.

c). if the price changes to $36, then:

worth of brokerage account becomes = 500 × $36 = $18,000

∴ percentage increase = (18,000 - 20,000) / 20,000 = 10% decrease

7 0
2 years ago
A Nasdaq-listed stock currently shows an inside market of 15.50 - 15.75, 10 x 10. A broker-dealer that is not a market maker in
tresset_1 [31]

Answer:

cross trade

Explanation:

In simple words, A cross trade can be understood as a transaction  when purchase and sell requests for the identical instrument are balanced alone without transaction being recorded on the market. Whenever a stockbroker performs matching buy and sell transactions for about the exact securities across several customer accounts plus reports these on an interchange, this is known like a cross transaction.

8 0
3 years ago
Which would be an example of sustainable development? a. Current use of fossil fuels in the U.S. b. Heap-leach extraction of gol
Setler [38]

Answer:

The correct answer is letter "D": Development of brownfields in urban areas.

Explanation:

In urban planning, sustainable development refers to continuous activities that can be performed during extended periods of time. They are the result of repeated patterns of individuals who, sometimes unconsciously, provoke more and more individuals to repeat their actions.

Under such a scenario, <em>the development of brownfields in urban areas is the result of building more department complexes in the cities because of the increasing need for renting and selling houses as a result of the increasing population growth.</em>

5 0
3 years ago
Read 2 more answers
Water Technology, Inc. Incurred the following costs during 20xt. The company sold all f ts products manufactured during the year
Thepotemich [5.8K]

Answer:

Part 1

<u>Variable Costs </u>

Direct material                                                           $5,000,000

Direct labor                                                                $2,400,000

<u>Fixed Costs</u>

                                                                                           $

Utilities (primarily electricity)                                         120,000

Depreciation on plant and equipment                        220,000

Insurance                                                                       150,000

Supervisory salaries                                                     400,000

Property taxes                                                              230,000

Salaries of top management and staff                        372,000

Office supplies                                                               45,000

Depreciation on building and equipment                    80,000

Part 2

<u>Forecast the 20x2 cost amount for each of the cost items listed</u>

Direct material ($5,000,000  x 1.20)                      $6,000,000

Direct labor (2,400,000 x 1.20)                               $2,880,000

Utilities (primarily electricity)                                       $120,000

Depreciation on plant and equipment                     $220,000

Insurance                                                                    $150,000

Supervisory salaries                                                 $400,000

Property taxes                                                           $230,000

Salaries of top management and staff                     $372,000

Office supplies                                                            $45,000

Depreciation on building and equipment                $80,000

Explanation:

Variable Costs vary with the level of production. Examples are Direct Materials and Direct labor.

Fixed Costs remain constant for any production level. Examples are Depreciation and Utilities such as electricity.

A growth in Sales will affect the Variable Costs only. As production increases to meet the 20 percent growth in sales so do these costs since they vary in direct proportion to the level of production.

4 0
3 years ago
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