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Pie
3 years ago
15

Tre-Bien, Inc., is a fast-growing technology company. Management projects rapid growth of 30 percent for the next two years, the

n a growth rate of 17 percent for the following two years. After that, a constant-growth rate of 8 percent is expected. The firm expects to pay its first dividend of $2.45 a year from now. If dividends will grow at the same rate as the firm and the required rate of return on stocks with similar risk is 22 percent, what is the current value of the stock?
Business
1 answer:
nordsb [41]3 years ago
4 0

Answer:

Value = $23.35

Explanation:

First, find dividend per year using the growth rates given;

D1 = 2.45

D2 = 2.45 (1.30) = 3.185

D3 = 3.185 (1.17) = 3.7265

D4 = 3.7265 (1.17) = 4.3600

D5= 4.3600(1.08) = 4.7088

Next, find the PV of each dividend;

PV(D1) = 2.45 / (1.22) = 2.0082

PV(D2) = 3.185 /(1.22²) = 2.1399

PV(D3) = 3.7265/ (1.22³) = 2.0522

PV(D4) = 4.3600/ (1.22^4) = 1.9681

PV(D5) = \frac{\frac{4.7088}{0.22-0.08} }{1.22^{4} } =  15.1825

Next, sum up the present values to find the current value of the stock;

=2.0082+ 2.1399 + 2.0522 + 1.9681 + 15.1825

Value = $23.35

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vladimir2022 [97]

Answer:

d. an increase in the quantity of bicycles demanded.

Explanation:

For this question, the law of demand applies.  

According to the law of demand, when the price of the good increases the quantity demanded of that good would be decreased keeping other things constant and when the price of the good decreases the quantity demanded of that good would be increased keeping other things constant.

It reflects the inverse relationship between the price and the quantity demanded of the good.

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2 years ago
Sustainable Growth Rate You have located the following information on Rock Company: debt ratio = 46.5%, capital intensity ratio
Sliva [168]

Answer:

The correct answer is 10.72% ( Approx.).

Explanation:

According to the scenario, the given data are as follows:

Debt ratio = 46.5%

Capital intensity ratio = 2.51 times

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Dividend payout = 38%

Formula to calculate sustainable growth rate ae as follows:

Sustainable growth rate = (Earnings retention rate × Return on equity ) / ( 1 - (ROE × RR)

where, Retention rate =(1 - dividend payout rate)

= (1-0.38) = 0.62

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= .21 × (1/2.51) × 1/(1-.465)

= .21 × 0.398 × 1.869

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Hence, the correct answer is 10.72% (approx.).

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3 years ago
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An outdoor brand called Appalachia can revitalize its Pinterest account and engage its customers on the platform by streamlining content creation:

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3 0
1 year ago
If Sasha works for 6 hours she can rent
zloy xaker [14]

Based on the number of apartments that Sasha can rent at 6 and 7 hours, her marginal benefit in the 7th hour is<u> 3 apartments. </u>

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This refers to the additional number of benefits that Sasha gets when she works an extra hour.

As a result of working one extra hour from 6 hours to make it 7 hours, the additional benefit Sasha gets is:

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Find out more on marginal benefits at brainly.com/question/11937697.

5 0
2 years ago
When a perfectly competitive firm (that sells its good for $20 per unit) hires 1 unit of factor X it produces 70 units of output
Gelneren [198K]

Answer:

d)  $300

Explanation:

<em>Marginal revenue is the extra revenue from a resource the extra revenue earned from the use of additional  unit of a given resource for production purpose. It is calculated as the increase in total revenue as a result of utilizing one additional unit of a factor of production.</em>

Marginal revenue = total revenue from 85 units - total revenue from 70 units

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5 0
2 years ago
Read 2 more answers
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