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NeTakaya
3 years ago
6

What should be the current price of a share of stock if a $5 dividend was just paid, the stock has a required return of 20%, and

a constant dividend growth rate of 6%? A. $19.23 B. $25.00 C. $35.71 D. $37.86
Business
1 answer:
Gala2k [10]3 years ago
5 0

Answer:

Current Price of the Share Stock is $ 37.86 (D)

Explanation:

Using dividend valuation method with a constant growth rate assumption, share price is calculated as : Po =D1/(Ke-g).

Where;  Po ⇒Market Value excluding any dividend currently payable

            D1= Do(1+g)⇒Expected dividend in one year's time

            Ke =Required rate of return by shareholders

             g= Dividend growth rate

<u>Calculation</u>

D1 = 5(1+0.06)= $5.3

Hence, Po= 5.3/(0.20-0.06)

            Po=$37.86

The share price is expected to reflect the future expected stream of income i.e  dividends and capital gains ,discounted at an appropriate cost of capital.

Some of the assumptions of dividend valuation method include but not limited to the following:

- it assumed that investors act rationality and in the same way ;

-the dividend either show growth or no growth;

-the discount rate used exceeds the dividend growth rate.

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Determine the ending inventory using the periodic inventory system and the weighted average cost method (rounded to the nearest
alekssr [168]

Answer:

The ending inventory is

Units        Unit Cost        Total

6           $6,35        $38,1

Explanation:

AVCO Perpetual chart is attached.  

AVCO Perpetual chart shows purchases , sales and balance of each period. Highlighted you will find the balance at the end of every purchase or sale.  

When you have a purchase: Use the following formula to get the weighted-average cost by unit:

(P₁*Q₁)+(P₂*Q₂)/(Q₁+Q₂)

P₁ and Q₁ are the balance from operation that you made before.  

P₂ and Q₂ is the data of the new operation (new purchase)

When you have a sale: you only discount the Quantity and use the average cost by unit to get the final inventory.  

The balance at the end of June is:

Units        Unit Cost        Total

6           $6,35        $38,1

Download xlsx
6 0
3 years ago
A project that costs $25,000 today will generate cash flows of $8,600 per year for seven years. What is the project's payback pe
Nimfa-mama [501]

Answer: 2.90 years.

Explanation:

Payback period is the amount of time that it will take a project to pay back or recuperate the initial investment in the project.

This project is making $8,600 a year and had an initial investment of $25,000.

The Payback period is;

= Investment / Annual Cashflow

= 25,000 / 8,600

= 2.90 years.

5 0
3 years ago
Larry owned and lived in a home for five years before marrying Darlene. Larry and Darlene lived in the home for one year before
Paraphin [41]

Answer:

answer 100k (:

Explanation:

3 0
3 years ago
In evaluating different market segments, the firm must look at two factors: the segment's overall attractiveness and the _______
Lesechka [4]

Answer: Company objective and the resources

Explanation:

For evaluating the different types of marketing segment of an organization it basically involve the two main factors such as the overall segments's attractiveness and also the main objective of the company and its resources.

 By evaluating the marketing segment we can easily evaluating each segment of the company so that the company producing the desirable result according to the consumer requirements.

The company objective is one of the type of goals of the company that helps in achieving the desirable result and the opportunities. Therefore, Company objective and the resources is the correct answer.  

8 0
3 years ago
Oak Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, Glover, and has always operated as a
HACTEHA [7]

Answer:

Oak Corp distributed $15,000 to Glover and we are required to compute the amount and character of gain Glover must recognize under the scenarios as stated in the question:

a. No gain will be recognized by Glover. Rather, his stock basis will be reduced from $35,000 to $20,000 ($35,000 basis - $15,000 cash distribution). So, gain recognized by him is $0.

b. Long term capital gain of $7,000 ($15,000 - $8,000) will be recognized by Glover and his stock basis will be reduced from $8,000 to $0.

c. The entire $15,000 ($15,000-$0) will be recognized as long term capital gain by Glover and his stock basis will remain $0.

8 0
3 years ago
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