<span>D.the use of taxation to encourage or discourage certain behaviors</span>
Last year mike bought 100 shares of Dallas corporation common stock for = $53 per share
he received this year dividends of = $1.45 per share
stock is currently selling for = $60 per share
rate of return = ?
capital yield %= (60 - 53 / 53) x 100 = 0.132 x 100 = 13.2%
dividend yield % = (1.45 / 53) x 100 = 0.0273 x 100 = 2.73%
Total yield or rate of return will be = 13.2 + 2.73 = 15.94 %
Answer:
$14.35
Explanation:
Firstly, we need to calculate enterprise value (EV) of this company, which is equal to present value of all free cashflows (CF):
- Terminal value of free cashflow at year 3 = Year 4 CF/(Cost of capital - Long-term growth) = [329 x (1 + 5.7%)^2 x (1 + 2.1%)]/(13.3% - 2.1%) = $3,350.84
- EV of the company = 329/(1 + 13.3%) + [329 x (1 + 5.7%)]/(1 + 13.3%)^2 + [329 x (1 + 5.7%)^2 + 3,350.84]/(1 + 13.3%)^3 = $3,117.91
Secondly, we calculate equity value as below:
EV = Equity value + Net debt = Equity value + (Debt - Cash), or:
3,117.91 = Equity value + (64 - 18), or Equity value = $3,071.91.
Finally, stock price of the company = Equity value/Number of shares = 3,071.91/214 = $14.35.
Answer:
Current Market value of the stock at 8.5% return: 105.88
Explanation:
We will calculate the present value of the dividends:
![\left[\begin{array}{ccc}Year&Cash \: Flow&PV\\1&1.722&1.59\\2&2.12&1.8\\3&2.61&2.04\\4&3.21&2.32\\5&3.40&98.13\\&&105.88\\\\\end{array}\right]](https://tex.z-dn.net/?f=%5Cleft%5B%5Cbegin%7Barray%7D%7Bccc%7DYear%26Cash%20%5C%3A%20Flow%26PV%5C%5C%3C%2Fp%3E%3Cp%3E1%261.722%261.59%5C%5C%3C%2Fp%3E%3Cp%3E2%262.12%261.8%5C%5C%3C%2Fp%3E%3Cp%3E3%262.61%262.04%5C%5C%3C%2Fp%3E%3Cp%3E4%263.21%262.32%5C%5C%3C%2Fp%3E%3Cp%3E5%263.40%2698.13%5C%5C%3C%2Fp%3E%3Cp%3E%26%26105.88%5C%5C%3C%2Fp%3E%3Cp%3E%5C%5C%5Cend%7Barray%7D%5Cright%5D)
We will do the following:
each dividends we multiply by the previous, by the grow rate of 23%
D1 1.40 x ( 1 + 23%) = D2 = 1.722
D2 1.722 x ( 1 + 23%) = D3 = 2.12
...
Then after the four years we calculate the gordon model for the infinite series of dividends
3.95/(0.085-0.06) = 158
Then calculate the present of each dividends applying the present value of a lump sum
PV div1 = 1.59
PV div2 = 1.8
PV div3 = 2.04
...
Then we add them and get the present value of the stock
Answer:
c. gives the same answer regardless of the direction of change.
Explanation:
The midpoint method helps to calculate elasticity using the average percent change in quantity and price and its advantage is that it gives the same elasticity between two points no matter if price increases or decreases.
