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
Umnica [9.8K]
3 years ago
10

Brickhouse is expected to pay a dividend of $2.60 and $2.24 over the next two years, respectively. After that, the company is ex

pected to increase its annual dividend at 2.8 percent. What is the stock price today if the required return is 10.2 percent?
Business
1 answer:
Sholpan [36]3 years ago
6 0

Answer:

$29.83

Explanation:

This question requires application of dividend discount model, according to which current value of share is present value of dividends expected in future.

P0=\frac{Div1}{(1+r)^{1} }+\frac{Div2}{(1+r)^{2} }+\frac{V2}{(1+r)^{2} }

where V2 is the terminal value, present value of dividends growing at constant growth rate,

V2 = Div3 ÷ (r - g)

Div3 = $2.24 × (1 + 2.8%)

        = $2.30272

V2 = $2.30272 ÷ (0.102 - 0.028)

    = $2.30272 ÷ 0.074

    = $31.12

P0=\frac{2.60}{(1+0.102)^{1} }+\frac{2.24}{(1+0.102)^{2} }+\frac{31.12}{(1+0.102)^{2} }

P0=\frac{2.60}{1.102}+\frac{2.24}{1.214404}+\frac{31.12}{1.214404}

          = 2.36 + 1.84 + 25.63

= $29.83

You might be interested in
The total cost of producing 15 tons of butter is $35000. If average variable cost is $530, then what is the firm's average fixed
saw5 [17]

Answer:

$1803.33

Explanation:

average total cost = average variable cost + average fixed cost

average total cost = total cost / quantity = $35000  / 15 = $2,333.33

average fixed cost = $2,333.33 -  $530 = $1803.33

5 0
3 years ago
A small business has determined that the machinery they currently use will wear out in 16 years. To replace the new machine when
Vlad [161]

Answer:

The initial deposit should be of: $97,439.62

Explanation:

Giving the following information:

To replace the new machine when it wears out, the company wants to establish a savings account today. The interest rate on the account is 1.9 percent per quarter and the cost of the machinery is $325,000.

To calculate the initial investment required, we need to use a variation on the simple interest future value formula:

FV= PV*(1+i)^n

PV= present value

Isolating PV:

PV= FV/(1+i)^n

i= 0.019

n= 4*16= 64

FV= 325,000

PV= 325,000/ (1.019^64)= $97,439.62

8 0
3 years ago
Pablo, a resident of New Mexico, while driving through Arizona was struck by an SUV driven by Drew, a resident of California. Dr
mart [117]

Answer: See explanation

Explanation:

Based on the information that was provided in the question, Pablo’s case with regards to the scenario given will be regarded as a civil case due to the fact that Drew is being sued.

The Federal court will be the court where the case will hold. This is due to the fact that the parties involved are from different states. While Pablo is from New Mexico, Drew is from California. For speeding, a criminal case can also be brought against Drew.

6 0
3 years ago
A hardware store rents its one wood chipper. A request for the chipper arrives every 4 days with a standard deviation of 4 days.
astraxan [27]

Answer:

20%

Explanation:

The question has a Mean of 1 day and the Standard deviation is 4 days, So it is apparent that in every Five days including the 4 days standard deviation, we have the chipper to be available and clients in need of it can rent it for 1 day.

Therefore if the chipper is going to be rented on the 1st day, it would be rented again after 4 days, on the 5th day.

utilization for the chipper will be

= (1/5) x 100

= 0.2 x 100

= 20%

6 0
2 years ago
Wanda is at work, on the clock, and is working on her private commercial business. She receives a reprimand from her supervisor.
Darina [25.2K]

Answer:

Her organization is permitted to monitor and the company's gadget she uses.

Explanation:

The fact that she is still an employee I that organization, the organization has the right to monitor her activities in the working environment. She has to get herself comported and follow the work I g ethics of the firm.

7 0
3 years ago
Read 2 more answers
Other questions:
  • Rasheed works for Company A, earning $299,000 in salary during 2019. Assuming he is single and has no other sources of income, w
    11·1 answer
  • To record a​ 6% stock​ dividend, accountants use​ ________. To record a​ 55% stock​ dividend, accountants use​ ________. A. par
    11·2 answers
  • A manufacturing company has a beginning finished goods inventory of $14,600, raw material purchases of $18,000, cost of goods ma
    15·1 answer
  • Which of the following may create barriers to customers with disabilities?select all that apply
    15·1 answer
  • Accounting Rate of Return Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. C
    13·1 answer
  • Which of these changes are planned and based on situations that are expected to arise?
    7·1 answer
  • Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the
    9·1 answer
  • In one week, Sami can knit 5 sweaters or bake 240 cookies. In one week, Leila can knit 15 sweaters or bake 480 cookies. Which of
    11·1 answer
  • Which of the following generate the type of externality previously described?
    14·1 answer
  • 1. Small Producer is heavily dependent on Massive Mart for product sales. When Massive Mart aggressively negotiates lower wholes
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!