1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Tresset [83]
3 years ago
8

Storico Co. just paid a dividend of $3.15 per share. The company will increase its dividend by 20 percent next year and then red

uce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the required return on the company’s stock is 12 percent, what will a share of stock sell for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
ololo11 [35]3 years ago
5 0

Answer:

The price of the stock today or the price at which the stock should sell today is $61.30

Explanation:

The price of the stock today can be calculated using the Dividend Discount Model approach which values a stock based on the present value of the expected future dividends from the stock. The price of this stock will be,

P0 = 3.15 * (1+0.2) / (1+0.12)  +  3.15  * (1+0.2) * (1+0.15)  /  (1+0.12)^2  +  

3.15 * (1+0.2) * (1+0.15) * (1+0.1) / (1+0.12)^3  +  

[(3.15 * (1+0.2) * (1+0.15) * (1+0.1) * (1+0.05) / (0.12 - 0.05))  / (1+0.12)^3]

P0 = $61.296 rounded off to $61.30

You might be interested in
Management career skills include managing _____.
Svetllana [295]

Answer:

the correct answer is finances

3 0
3 years ago
Parker Corp. owns 80% of Smith Inc.'s common stock. During Year 1, Parker sold Smith $250,000 of inventory on the same terms as
IrinaVladis [17]

Answer:

c. $500,000

Explanation:

Given that :

Parker Corp. owns 80% of Smith Inc.'s common stock

During Year 1, Parker sold Smith $250,000 of inventory

Therefore; adjusted for inter Corp. sales = $250,000

The following information pertains to Smith and Parker's sales for Year 1:

                         Parker                     Smith

Sales                 $ 1,000,000            $ 700,000

Cost of Sales    $400,000                $ 350,000

Total                   $ 600,000              $ 350,000

For the Unadjusted Cost of Sales of Parker and Smith = $400,000+$ 350,000

= $750,000

The amount that Parker should report as cost of sales in its Year 1 consolidated income statement = Unadjusted Cost of Sales - adjusted for inter Corp. sales

= $750,000 -  $250,000

= $500,000

7 0
3 years ago
The owner of a bicycle repair shop forecasts revenues of $212,000 a year. Variable costs will be $63,000, and rental costs for t
Nataly [62]

Answer:

Sales Revenue            212,000

Variable Cost               (63,000)

Rent Expense               (43,000)

Depreciation Expense (23,000)

Income before taxes     83,000

Income tax expense <u>    (16,600)   </u>

Net Income                    84,800

Cash from operating activities 107,800

tax-shield from depreciation 4,600

Explanation:

Cash flow from operations (indirect method)

net income 84,800 + depreciation expense = 107,800

The depreciation provides a tax shield as they are an accounting concept. The depreciation expense did not involve the outflow of cash but, it is a taxable deduction therefore generates a tax-shield.

23,000 x 20% = 4,600

7 0
3 years ago
Jerome's Italian Pizza is in a very competitive industry, and its upper management believes that it can achieve higher profits b
Troyanec [42]

Answer:

That statement is true

Explanation:

Strategic goal is the type of goal that is carefully designed to accomplish a business strategy, This type of goals need to express the desired outcome that wanted be achieved and listed a specific set of actions that can make the company achieve that outcome. Strategic goal commonly created when a company want a more concrete way to measure its success compared to other competitors.

This can be seen in Jerome's italian pizza.

"Increase profits by 15% a year for each of the next five years" is  what considered to be the desired outcome.

lowering costs and prices, providing quicker delivery, and providing good customer service are the Sets of action that the company intended to take.

3 0
3 years ago
Luther owns a bakery. He has been trying to obtain a long-term contact with the owner of Martha’s Tea Salons for some time. Luth
finlep [7]

Answer:

The full description of the particular circumstance is listed underneath in the overview section.

Explanation:

  • Throughout the one side, as either a consequence of getting fathomed their deal, I have seen whether it could be Luther's mistake and therefore tried repeatedly to be doing the promotions that may be thought of as unfair intervention, but it does not mean that he did so to mess with their deal when he could have simply considered mischievously promoting.
  • As either a consequence of the positioning of these commercials, he undoubtedly planned to intervene legitimately with the mere truth of comprehension of the deal. Because Martha as well as Harley seems to have a deal, as a direct consequence of maintaining a long-term partnership within the deal, Martha may be the controller responsible for the unjust personal behavior, and Martha just skits the service agreement as something of a consequence of loving the advertisements.
  • I wouldn’t believe they would always keep Martha accountable for anything although she might using the justification that religion gave her a more comprehensive bargain that is fair to justify unjust action. There seem to be no separate offenses whereby Harley can use for her protection, such as aggravated assault or slander.
4 0
3 years ago
Other questions:
  • During regular operating hours, passengers of Fly-Hi airlines arrival at the airport at the average rate of 190 per hour (Poisso
    15·1 answer
  • If an economy’s GDP falls, then it must be the case that the economy’s Group of answer choices income falls and saving rises. in
    8·1 answer
  • A recent study conducted by Estelle Cosmetics Company showed that heavy users of Estelle's products comprise a small percentage
    8·1 answer
  • Several factors can contribute to long-term organizational success. one is the establishment of a core ideology that collins and
    10·1 answer
  • Suppose you learn that your friend is serving flank steak at her​ party; all-you-can eat and at no charge. Flank steak is your f
    10·1 answer
  • Which of the following best describes how economists test the empirical predictions of economic models? A) Economists survey ind
    15·1 answer
  • The Vice President of Biomedics is trying to decide on the composition of a new product development team. If she chooses members
    15·1 answer
  • Suppose you owe $3,000 on your credit card. You pay a minimum payment of $30 each month. At an Annual Percentage Rate of 12% (or
    8·1 answer
  • Define quality controll​
    15·2 answers
  • What is 35% off $116.09?​
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!