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exis [7]
3 years ago
5

In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five y

ears or so, then find the "terminal" stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.17. The dividends are expected to grow at 12 percent over the next five years. The company has a payout ratio of 40 percent and a benchmark PE of 19. The required return is 12 percent. What is the target stock price in five years?
What is the stock price today?
Business
1 answer:
svlad2 [7]3 years ago
3 0

Answer:

Stock Price in 5 years: $97.94. Stock Price Today: $55.575

Explanation:

A pay-out ratio is computed by dividing dividends per share over earnings per share. Meanwhile, PE or Price-Earnings Ratio is computed by dividing the market value of stocks over earnings per share. Thus, using the pay-out ratio formula, the earnings per share is 2.925 ($1.17/40%) and using the PE ratio formula, the market price of stocks today is $55.575 (19 x 2.925). After 5 years, multiplying 1.17 and 12% rate raised to the 5th power, the dividend will amount to $5.1548. Using pay-out ratio, earnings per share is 5.1548 ($2.0619/40%) and the market price of stock after 5 years is $97.94 ($5.1548 x 19).

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gtnhenbr [62]

Aggregate demand left.

<h3>What Is a Supply Shock?</h3>

A supply shock is an unanticipated occurrence that abruptly alters the supply of a good or commodity, causing an unanticipated shift in price. Supply shocks can be positive, resulting in an increased supply, or negative, resulting in a lower supply; however, they are frequently negative. A negative (or adverse) supply shock drives up the price of a product, whereas a positive supply shock drives it down, assuming that overall demand remains constant.

A shift in the supply curve to the right caused by an increase in output and a positive supply shock lowers prices, whereas a reduction in production and a negative supply shock raises prices. Any unforeseen event that reduces output or upsets the supply chain has the potential to cause supply shocks.

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6 0
2 years ago
Rather than acquire an existing machine parts manufacturer in Mexico, Robertson Corp., based in Ohio, chose to establish new ope
Rufina [12.5K]

The form of Foreign direct investment used to acquire the existing machine parts manufacturer in Mexico, Robertson Corp based in Ohio is called a greenfield investment.

<h3>What is a greenfield investment?</h3>

A greenfield investment refers to a foreign portfolio investment whereby a company buys the stocks or bonds of an existing company.

In conclusion, the acquisition of Robertson Corp in other to establish new operations in a northern Mexico is called a greenfield investment.

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5 0
2 years ago
Broadbanding eliminates layers in pay grades requiring organizations to find other ways to reward employees. Group startsTrue or
AlekseyPX

Broad banding eliminates layers in pay grades requiring organizations to find other ways to reward employees. False

  • A technique called "broad banding" replaces a large number of small wage ranges with a smaller number of larger compensation ranges when evaluating and building a job grading structure. Establishing what is necessary to pay for a certain position with help from broad banding.
  • Payroll departments employ broadband for human resource management. When deciding how much to pay specific roles and the incumbents in those positions, a job grading structure known as "broadcasting" lies somewhere between using spot salaries and several job grades. Broad banding does provide some broad job classifications to the business that uses it, but it does not have as many discrete job grades as do traditional compensation systems.

Thus this is the answer.

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6 0
2 years ago
On January 1, 2021, Calloway Company leased a machine to Zone Corporation. The lease qualifies as a sales-type lease. Calloway p
Delicious77 [7]

Answer:

DR Interest receivable                                  26,400

CR Interest revenue                                                       26,400

Explanation:

As first lease has already been paid, the amount left of the lease is;

= 280,000 - 40,000

=$240,000

Interest is 11% so the interest to be received in December is;

= 11% * 240,000

= $‭26,400‬

This will be debited to Interest receivable as it is money owed and credited to Interest revenue as it is money earned.

6 0
3 years ago
Why might a project manager avoid using technical language when giving a presentation to clients?
Reil [10]

Answer:

Forget that you’re up there not to promote how wonderful you are, but to provide value to the audience.

Lose focus of what the audience needs from you. One way: Before you start talking, ask, “What do you hope to learn/achieve from this meeting?”

Fail to set objectives. Even if you don’t share them with participants, know what you want to achieve.

Proceed without a plan (also known as an agenda). Whatever you call it, it’s a map for how your session is going to go.

Wing it. Preparation is everything. Unless you’re an improv master, you have to figure out what you’re going to do, in what order and for how long. And almost everyone needs to practice.

Jump from point to point in a disorganized way. See #4 and #6.

7 0
3 years ago
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