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ElenaW [278]
2 years ago
10

BioScience Inc. will pay a common stock dividend of $4.60 at the end of the year (D1). The required return on common stock (Ke)

is 17 percent. The firm has a constant growth rate (g) of 7 percent. Compute the current price of the stock (P0)
Current Price______________
Business
1 answer:
Angelina_Jolie [31]2 years ago
8 0

Answer:

The current price of the stock is $46

Explanation:

We will use the gordon growth model to calculate the price of the stock. The formula is

Price= D1/R-G

D1 is the year end dividend

R is the required return on the stock and G is the constant growth rate.

We will plug in the numbers in the formula in order to find the price.

4.60/(0.17-0.07)=46

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3 years ago
If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should a. use
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Answer: Option C

                                     

Explanation: In simple words, inelastic demand refers to a situation when the demand of the buyer does not change as per the price of the commodity. Thus, the price does not increase or decrease with decrease or increase in demand.

Hence the farmers should decrease the supply as there would be no profit for them to supply a product that has an inelastic demand.

5 0
3 years ago
Misty and John formed the MJ Partnership. Misty contributed $50,000 of cash in exchange for her 50% interest in the partnership
Pie

Answer:

$78,000

Explanation:

The computation of interest at year end is shown below:-

Interest at year end = Cash contribution + Income of partnership + Share of partnership liabilities - Cash from the partnership

= $50,000 + $20,000 × 50% + $60,000 × 50% - $12,000

= $90,000 + $10,000 + $30,000 - $12,000

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