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
Lelechka [254]
3 years ago
11

City Foods, is a firm that is experiencing rapid growth. The firm just paid a dividend of $2.00 yesterday. They expect to see th

eir dividend grow at a twenty percent rate for the next two years and then level out at a continuous six percent growth rate. City Food's required rate of return is twelve percent. What is the most you would pay for City Foods' common stock now
Business
1 answer:
slega [8]3 years ago
5 0

Answer:

The maximum that should be paid for the stock today is $45 per share.

Explanation:

To calculate the current share price or the maximum that should be paid for the stock today, we will use the dividend discount model approach.

The dividend discount model (DDM) estimates the value of a share/stock based on the present value of the expected future dividends from the stock. We will use the two stage growth model of DDM here as the growth in dividends of the stock is divided into two stages.

The formula for current price under two stage growth model is,

P0 = D0 * (1+g1) / (1+r)  +  D0 * (1+g1)^2 / (1+r)^2 + ... + D0 * (1+g1)^n / (1+r)^n  +

[( D0 * (1+g1)^n * (1+g2)) / (r - g2)] / (1+r)^n

Where,

g1 is initial growth rate

g2 is the constant growth rate

r is the required rate of return

So, the price of the stock today will be,

P0 = 2 * (1+0.20) / (1+0.12)  +  2 * (1+0.20)^2 / (1+0.12)^2  +    

[( 2 * (1+0.20)^2 * (1+0.06)) / (0.12 - 0.06)] / (1+0.12)^2

P0 = $45

You might be interested in
Furnco sells secretarial chairs. Annual demand is normally distributed, with mean of 1,040 chairs and standard deviation of 50.9
kaheart [24]

Answer:

Reorder point is 40

Explanation:

Reorder point is the level of inventory which trigger the purchase of new inventory.

The formula for Reorder point is

Annual demand * Leadtime + Safety Stock

Reorder Point = 1040 / 365 * 14 days + 0

= 40.

The lost sales cost is $50 in goodwill, Furnco should keep a safety stock of at least 30 chairs in order to meet demand level.

7 0
2 years ago
An assumption for a construction project could be Select one: a. a grant will be secured to help fund the project. b. the materi
Eduardwww [97]

Answer:

a. a grant will be secured to help fund the project.

Explanation:

In project management, a project manager can be defined as an individual or organization that temporarily undertakes a project in order to create a unique result, product, and service. Project managers strives very hard so that they can achieve their aims, goals and objectives in the most cost-effective, efficient and best manner through the use of unique set of interrelated tools, skills and tasks.

An assumption for a construction project could be, a grant will be secured to help fund the project.

Project managers sometimes embark on the execution of projects without having enough fund to finish it successfully. There assumptions are usually that once they have commenced the process, a grant can be secured from creditors, investors or financial institutions to help fund the remaining part of the project. However, since it is an assumption, they're not guaranteed that the grant will be given to them; therefore, this can result to the stalling of projects sometimes.

By virtue of standards, materials to be used to construct the building, the size of the building that is to be constructed and the regulations and codes required for the building should never be assumed by project managers.

6 0
3 years ago
A loss is when:
Kruka [31]
B, you don’t have enough profit
4 0
2 years ago
Pizza Hut's website __________ are integrated with the company's overall communications programs - including traditional media -
Morgarella [4.7K]

Answer:

e. content; communications

Explanation:

The website content refers to all multimedia and text found on it. Content should always be relevant and aligned with the company's overall communications plan.

A key part of<u> </u><u><em>integrated marketing communications (IMC)</em></u> is the fact that a company should have all of its media deliver a consistent marketing message.  That applies to the website's content and communications too, as it must integrate those factors with other media and platforms. All the media should cover the same topics - company promotions, product innovation or special customer incentives.

<em>Context, commerce </em>and<em> connection</em> are irrelevant terms for the IMC concept.

4 0
2 years ago
When we commit to students’ wellbeing and learning through the practice of positive influence, professional judgment and empathy
natulia [17]

Answer:

c. care and protection

Explanation:

The answer to this question is based on the framework of Ethical Standards for those pursuing a teaching profession. It involves four main values; care, respect, trust and integrity. This framework acts as a guide to educators on ethical ways to think, act and make decisions when serving students. Committing to students’ wellbeing and learning through the practice of positive influence, professional judgment and empathy in practice is part of care and protection.  

4 0
3 years ago
Other questions:
  • Gugenheim, Inc., has a bond outstanding with a coupon rate of 5.7 percent and annual payments. The yield to maturity is 6.9 perc
    15·1 answer
  • ________ refers to personal communication between a seller and a customer who wants the seller to resolve a problem with a purch
    15·1 answer
  • Expenses, such as depreciation on buildings are also known as variable expenses. t or f?
    14·1 answer
  • assey Corporation purchased a piece of land for $50,000. Massey paid attorney's fees of $5,000 and brokers' commissions of $4,00
    7·1 answer
  • Income Statement. A firm’s income statement included the following data. The firm’s average tax rate was 20%. (LO3-1) Cost of go
    11·1 answer
  • Oriole Family Instruments makes cellos. During the past year, the company made 6,630 cellos even though the budget planned for o
    7·1 answer
  • All of the following will cause a decline in a company’s gross profit EXCEPT A : clearance of discontinued inventory. B : sellin
    11·1 answer
  • Which answer is true? <br> A.Bankruptcy ruins you credit for years
    12·1 answer
  • Gray Corp. employees work 2 hours on each of the 200 units that they produce and are paid $8 per hour. The standards for Gray Co
    12·1 answer
  • The CEO of Tough Mudder believes that teams in his company are not working as effectively as they could, and he is asking you fo
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!