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uranmaximum [27]
3 years ago
7

Assume that the risk-free rate of interest is 3% and the expected rate of return on the market is 15%. A share of stock sells fo

r $69 today. It will pay a dividend of $2 per share at the end of the year. Its beta is 1.1. What do investors expect the stock to sell for at the end of the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Business
1 answer:
Svetllana [295]3 years ago
3 0

Answer:

CAPM= RF+ B(RM-RF)= Required return

3+1.1(12)=16.2% is the required return according to the CAPM method

The stock is expected to return 16.2% in the form of price appreciation and dividends. In this case the dividends are expected to be 2$ and 2/69=2.89 %.

So we know that out of the 16.2 % expected return 2.89% will come from dividends and the rest by increase in stocks price, so in order to find the increase in stocks price we subtract 2.89% from 16.2% and we get 13.31%.

So the stocks price is expected to increase by 13.31%

1.1331*69= 78.18

The investors expected the stocks price to be $78.18 at the end of the year

Explanation:

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Answer:

Goldnest company

A. Journal entries

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Debit Cash Account with $509,000

Credit Sales with $509,000

B. T Accounts are included in the attached for your understanding

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Explanation:

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What can a business do to improve its productivity? Lower salaries/Reduce its workforce/ Sell assets/ Invest in capital
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The Valenti Company uses flexible budgeting for cost control. Valenti produced 10,800 units of product during October, incurring
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Answer:

$500 favorable

Explanation:

Given;

Number of units produced  = 10,800 units

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Per unit reflected indirect material costs = $180,000 ÷ 144,000

= $1.25 per unit

Therefore,

Budgeted indirect material cost for actual units produced

= $1.25 × 10,800

= $13,500

since,

the budgeted cost for indirect material cost for actual units produced is more than the actual indirect material cost, therefore

the indirect material costs in October is favorable

amount = Budgeted cost - Actual cost

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5 0
3 years ago
Chegg "​(Yield to​ maturity)  A​ bond's market price is ​$725. It has a ​$1000 par​ value, will mature in 14 ​years, and has a c
spayn [35]

Answer:

17.26%

YTM falls to 16.62%

YTM rises to 19.34%

Explanation:

The bond yield to maturity is the computed using excel rate formula given below:

=rate(nper,pmt,-pv,fv)

nper is the number of semiannual coupons the bond has i.e 14*2=28

pmt is the semiannual coupon of the bond=$1000*12%/2=$60

pv is the current market price of $725

fv is the face value of $1000

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=rate(28*2,60,-725,1000)=8.31% *2=16.62%

7 years:

=rate(7*2,60,-725,1000)=9.67%*2=19.34%

3 0
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