Answer:
e) $37.05
Explanation:
Using the dividend growth model, the value of a stock is the present value of the future dividends receivable discounted at the required rate of return . The required rate of return is given as 12%.
So we discount the year 3 dividend using the dividend growth model formula
P = D (1+g)/r-g
r- rate of return, g = growth rate
Present value of the future dividends:
PV of Year 1 = 1.55(1.015)m × 1.12^(-1)
= 1.4047
PV of Year 2 = 1.55 (1.015)(1.015) × 1.12^(-2)
= 1.27
PV of Year 3 (this will be done in two steps)
Step 1; PV (in yr 2) of year 3 dividend
= (1.55)(1.015)^2×(1.08)/(0.12-0.08)
=43.114
Step 2 : PV (in yr 2) of year 3 dividend
=43.114 × (1.12^(-2))
= 34.37
Best estimate of stock = 1.40 + 1.27 +34.37
= $37.05
Note
To discount the year 3 dividend, we use two steps. The first stp helps get the PV in year 2, and step 3 helps to take it further to the PV in year 0
Answer and Explanation:
Risk and return are equal companions if we invest in a market with a higher risk that's mean this type of market provides a higher return.
If Investors invest their whole money in the high-risk market for there high return, may they get a huge loss.
So, The exposure must be balanced by investments in diversified markets with different risk weights.
Answer:
Answer is explained in the explanation section.
Explanation:
If the wages of the Hispanics construction worker in America are less then, they will not have near as much money to send home to their relatives back in Mexico.
And if their families do not have as much as it use to be then they will not be able to buy near as much as they used to.
It means that if the construction workers don't get as much money as they used to then, neither they nor their families will be able to spend as much as they use to which will obviously hurt each of their economies.
Jack can face multiple risks.
He can be injured or killed in a car wreck.
He can injure or kill someone in a car wreck.
Bills.
Car note.
Gas Money
Tickets.
Parking.
Hope this helps Buddy!
- Courtney
Answer:
The US income will be $12,201 and South Korea's income will be $21,911. US income will grow by multiple of 1.2 while South Korea's GDP will grow by multiples of 2.19.
Explanation:
Initial income of both the countries is $10,000.
Growth rate of South Korea is 4%.
Growth rate of US is 1%.
In 20 years, South Korea's income will be,
=Initial income*
=$10,000*
=$10,000*2.1911
=$21,911
Similarly, we can find US income.
=Initial income*
=$10,000*
=$10,000*1.2201
=$12,201
So, South Korea's income is $21,911 while US's income is $12,201.
South Korea's income grows by the multiples of 2.1911. While, US's income grows by the multiples of 1.2201
