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aev [14]
3 years ago
8

Suppose you know a company's stock currently sells for $90 per share and the required return on the stock is 8 percent. You also

know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?
Business
1 answer:
maks197457 [2]3 years ago
8 0

Answer: $3.46

Explanation:

Given the following :

Current share price (P0) = $90 per share

Required return on stock= 8%

total return on the stock is evenly divided between a capital gains yield and a dividend yield ;

Therefore, Required return on stock= 8% ;

4% capital gain yield + 4% Dividend yield = 8%

Growth rate = 4% = 4/ 100 = 0.04

D1 = D0(1 + g)

D1 = value of next year's Dividend

D0 = current Dividend yield

g = Constant growth rate

D1 = current stock price * g

D1 = 90 * 0.04 = 3.6

D1 = D0(1 + g)

D0 = D1 / (1+g)

D0 = 3.6 / (1+ 0.04)

D0 = 3.6 / 1.04

D0 = $3.46

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3 years ago
Jasmine (29) is filing as a single taxpayer. In 2019, she received income from the following sources:
lianna [129]

Answer:

$38,720

Explanation:

From the given information:

Using Schedule 1 (Form 1040), Additional Income & Adjustment to Income.

The taxable income can be determined as follows:

Particulars                                         Form                         Amount($)

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Total Income                                                                    $40,820

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3 0
3 years ago
Products that are in the maturity stage of their life cycles and have established market acceptance will often use ads so as to
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The answer is true. It is a true statement

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When a product reaches its maturity life cicle there is promotion focuses on reminder advertising and keeping customers involved. In addition  the emphasis is placed on holding market share through further differentiation and attracting new buyers.

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______ is the Gross National Product. Answer The value of crops produced annually The average stock price of major industries Th
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A stock has an expected return of 11.9 percent, its beta is .94, and the risk-free rate is 5.95 percent. What must the expected
bixtya [17]

Answer:

The market expected return is 12.28%

Explanation:

According Miller and Modgliani Capital Asset Pricing Model,the expected return on a stock is given by the formula below:

Ke=Rf+Beta(Market expected return-Rf)

Rf is the risk free-rate of return

Ke=11.9%

Beta=0.94

risk-free rate of return=5.95%

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MER=12.28%

The market expected rate having Miller and Modgiliani CAPM formula is 12.28%

7 0
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