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pav-90 [236]
4 years ago
15

Cullumber Corp. paid a dividend of $2.44 yesterday. The company’s dividend is expected to grow at a steady rate of 5 percent for

the foreseeable future. If investors in stocks of companies like Cullumber require a rate of return of 25 percent, what should be the market price of Cullumber stock? (Round dividend to 3 decimal places, e.g. 3.756 and round final answer to 2 decimal places, e.g. 15.25.)
Business
2 answers:
Y_Kistochka [10]4 years ago
8 0

Answer:

The market price is $12.81 per share.

Explanation:

The price of the stock today can be calculated using the constant growth model of DDM as the dividends are expected to grow at a constant rate. The formula to calculate the price of the stock under constant growth model is,

P0 = D1 / r-g

Where,

  • D1 is the Dividend for the next period or D0 * (1+g)
  • r is the required rate of return
  • g is the growth rate in dividends

P0 = 2.44 * (1+0.05)  /  (0.25 - 0.05)

P0 = $12.81

solong [7]4 years ago
4 0

Answer:

The market price of Cullumber stock should be $12.81.

Explanation:

To calculate the market price of Cullumber stock, we use the dividend discount model (DDM) formula stated as follows:

P = Next year dividend ÷ (r - g) ................................ (1)

Where,

P = stock market price = ?

Next year dividend = Do × (1 + 0.05) = $2.44  × 1.05 = $2.562

r = required return = 25% = 0.25

g = dividend growth rate = 5% = 0.05

These above values are now substituted into equation (1) as follows:

P = $2.562 ÷ (0.25 - 0.05) = $2.562 ÷ 0.20 = $12.81

Therefore, the market price of Cullumber stock should be $12.81.

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Caleb wants to start a business in the health and wellness industry, but before taking the time and effort to create this business, he should know how this business sector has recently performed and where it is headed. Basically, Caleb needs to educate himself on industry trends. (Option A)

<h3>What is this questions about?</h3>

These questions are about business administration. See other answers below.

Financial accountants prepare financial information for people who are both inside and outside the company to assess if the company is performing well. (Option C)

<h3>If Cameron prepares information—such as reports on costs and operations—for the use of employees only, what type of accountant is he?</h3>

Cameron is a managerial Accountant. (Option A).

Jonathan and his partner Drew understand they need to create a document to address stipulations for working with their vendors who supply building materials and home decor staging products for their home show.

<h3>While drafting a contract, what key principles should Jonathan and Drew remember?</h3>

The key principles they ought to remember are;

  • Exchange of value;
  • offer and acceptance. (Option B)

Learn more about Business Administration:

brainly.com/question/26106218

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4 0
2 years ago
Chandler Sporting Goods produces baseball and football equipment and lines of clothing. This year the company had cash and marke
liraira [26]

Answer:

3. $2,123,612

Explanation:

As we know that

Net working capital = Current assets - current liabilities

where,

Current assets = Cash and marketable securities + inventory + accounts receivables + other current assets

= $335,485 + $1,651,599 + $1,488,121 + $121,427

= $3,596,632

Current liabilities = Accounts payable +  short-term notes payable

                            = $1,159,357 + $313,663

                            = $1,473,020

So, the net working capital is $2,123,612

4 0
3 years ago
"Assume that a seven-firm cartel supplies 500 million units of Whatailsya energy drink at a price of $5.00 per unit. Each firm s
vodomira [7]

Answer:

Incomplete question. Helpful details provided below.

Explanation:

A seven firm cartel implies a group of seven individual firms or companies that produce similar products who mutually agreed to supply certain amount of these products at a fixed price inorder to equally and fairly make profit.

In this case, the law of demand and supply applied resulting in a drop in price of Whatailsya because of excess supply.

7 0
4 years ago
This type of budgeting technique is commonly used because it provides a budget that is tied directly to the company's strategy a
mixer [17]

Answer:

Objective and task.

Explanation:

A budget is a financial plan used for the estimation of revenue and expenditures of an individual, organization or government for a specified period of time, often one year. Budgets are usually compiled, analyzed and re-evaluated on periodic basis. The benefits of having a budget is that it aids in setting goals, earmarking revenues and resources, measuring outcomes and planning against contingencies.

The budgeting method described in the question is called objective and task. It is typically used by various organizations or companies due to the fact that, it's tied directly to the strategy and tactics of a company on an annual basis. Also, it is used to set a budget for marketing efforts while anticipating on informations about the company.

8 0
3 years ago
The seller told the listing broker that the seller's loan was assumable. Upon reviewing the seller's loan documents the listing
VMariaS [17]

Answer:

Due on sale clause

Explanation:

A due on sale clause is the clause in which there is a promissory note or a loan that specified that the full balance could be called up at the time of sale or ownership transfer in order to protect the note

Therefore in the given situation, since it is mentioned that the seller has to pay the amount at the time of sale

So this represents the due on sale clause

4 0
3 years ago
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