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Eva8 [605]
3 years ago
6

Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends.

However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from today. The dividend should grow rapidly-at a rate of 16% per year-during Years 4 and 5; but after Year 5, growth should be a constant 8% per year. If the required return on Computech is 14%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations.
Business
1 answer:
sweet [91]3 years ago
5 0

Answer:

The intrinsic value of the stock is 9.76

Explanation:

We have to use the dividend growth model

It is fundamental to understand that these values are in the future so we must take them to present value, using the required return of 14%

\left[\begin{array}{ccc}-&DIVIDENDS&PRESENT VALUE\\1&0&0\\2&0&0\\3&0.75&0.506228637151512\\4&0.87&0.515109841312065\\5&1.0092&8.73578093453209\\Intrinsic&Value&9.75711941299567\\\end{array}\right]

We multiply year 3 by 1.16 to get year 4

Then we multiply year 4 by 1.16 to get year 5 dividends.

Then we use the dividend growth model to get the value ofthe future years

\frac{dividends}{return-growth} = intrinsic \: value

Again, this value is set 5 years into the future, so we have to calculate the present value

\frac{intrinsic \: value}{1.14^{5} } = Present Value

Same process is done for year 3 and 4

\frac{.75}{1.14^{3} } = PV \: Year3

\frac{.87}{1.14^{4} } = PV \: Year4

Then we add the three values to get the value of the stock today.

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A bakery famous for its cupcakes opens its doors at 9 a.m. and allows each customer to purchase up to 2 cupcakes until the day's
algol [13]

Answer:

1) The cupcakes are being sold below their equilibrium price

3) The customers who receive cupcakes are the customers with the highest willingness to pay for cupcakes.

4) The bakery is not using price as the only means of allocating cupcakes to its customers.

.Explanation:

at equilibrium price, quantity demanded equals quantity supplied and there would be no excess demand as in the case of the bakery.

The customers who receive cupcakes are the customers with the highest willingness to pay for cupcakes because these consumers are willing to lineup for these cupcakes.

the bakery also allocates the cupcakes by time. the cupcakes are usually only available within a specific time

8 0
3 years ago
The positioning strategy of using cost leadership or differentiation to produce a specialized product or service for a limited,
iren [92.7K]

Answer:

focus strategy

Explanation:

Focus strategy is a business strategy  where a business concern stratify or segment a large market so as to concentrate on that small part, Market segmentation allows the business focus its marketing effort on the choosing segment for best customer experience. Focus strategy can help the business be a market leader in the choosing segment.

8 0
3 years ago
A husband owns 20% of the equity of a listed corporation, with his wife holding a 5% equity position in that corporation. If the
Anna [14]

Answer:

A. is subject to all provisions of Rule 144.

C. Must file a Form 144 within 90 days of selling.

Explanation:

In the question, the husband owns 20% and his wife holds 5% of the equity. However, the wife plans to put her own holding up for sale. The wife is subject to all the provisions of Rule 144. In addition, before she can proceed with her plan, she needs to fill the Form 144 and the form must be filled not more than 90 days after selling the holding.

5 0
4 years ago
Read 2 more answers
Ultimate Sportswear has $190,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also ha
iragen [17]

Answer:

$11,400  and $27,600

Explanation:

The computation of the dividend distributed are as follows

Given that

6% noncumulative, nonparticipating, preferred stock = $190,000.

Common stock outstanding   = $590,000.

In the first year,  no dividend paid by the company.

The preferred stock is noncumulative that means no dividend will be a carryover.

Second year dividend paid by company = $39,000

 Now based on the given information, the dividend distributed are as follows

For preffered stock

= $190,000 × 6%

= $11,400

And for common stock

= $39,000 - $11,400

= $27,600

This is the correct answer but the same is not provided in the given options

First we have to paid preferred stockholders and then equity stockholders

4 0
3 years ago
Fraudulent charities frequently collect donations in the following ways:
Kisachek [45]

Answer:

email, phone, door-to-door

Explanation:

Commercials and fundraiser events are too public for frauds

8 0
3 years ago
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