The question is incomplete. Here is the complete question.
Caribou Gold Mining Corporation is expected to pay a dividend of $6 in the upcoming year. Dividends are expected to decline at the rate of 3% per year. The risk-free rate of return is 5%, and the expected return on the market portfolio is 13%. The stock of Caribou Gold Mining Corporation has a beta of .5. Using the constant-growth DDM, the intrinsic value of the stock is _________. A. $150 B. $50 C. $100 D. $200
Answer:
$50
Explanation:
Caribou Gold mining corporation is expected to make a dividend payment of $6 next year
Dividend are expected to decline at a rate of 3%
= 3/100
= 0.03
The risk free rate of return is 5%
= 5/100
= 0.05
The expected return on the market portfolio is 13%
= 13/100
= 0.13
The beta is 0.5
The first step is to calculate the expected rate of return
= 0.05+0.5(0.13-0.05)
= 0.05+0.5(0.08)
= 0.05+0.04
= 0.09
Therefore, the intrinsic value of the stock using the constant growth DDM model can be calculated as follows
Vo= 6/(0.09+0.03)
Vo= 6/0.12
Vo= $50
Hence the intrinsic value of the stock is $50
Learn how to spell 'what' and 'Plus'
Answer:
$44.18
Explanation:
The price can be easily calculated by the simple formula,
Price of stock = Dividend / (rate of return - growth of dividend)
Hence,
Price of stock = 1.90 / (0.085 - 0.042)
Price of stock = $44.18.
Hope you understand this simple equation
Thanks buddy.
Answer:
I know their support was not unconditional though they seem friends.
Explanation:
If you are the Bhutanese student then I am sure this question came in 2017 BHSEC. Best of luck.
Answer:
Debit Supplies Expenses $850 and Credit supplies $850
Explanation:
Kimdly check attached picture for explanation
