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
kondor19780726 [428]
3 years ago
9

Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $1.25 at the end of the year. Its div

idend is expected to grow at a constant rate of 6.00% per year. If Walter’s stock currently trades for $16.00 per share, what is the expected rate of return?
Business
1 answer:
tino4ka555 [31]3 years ago
3 0

Answer:

The expected/required rate of return is 13.8125%.

Explanation:

The stock is a constant growth stock as the dividends are expected to grow constantly forever. The constant dividend growth model of DDM is used to calculate the price of such a stock today. As we already know the price, we will use the formula of the constant growth model to determine the required rate of return. The formula for constant growth model is:

P0 or Price today = D1  /  r - g

Plugging in the available known values,

16  =  1.25  /  (r - 0.06)

16 * (r - 0.06)  =  1.25

16r  -  0.96  =  1.25

16r = 1.25 + 0.96

r = 2.21 / 16

r = 0.138125  or  13.8125%

You might be interested in
A vendor makes a new smartphone and presells four thousand units for $300 each. The factory has the capacity to produce one thou
Oksanka [162]

Answer:

2. Limited supply would increase the price

Explanation:

In the given case the vendor sells in advance four thousand units for $300. While the installed capacity of the factory being to produce 1000 smartphones every month.

Expected sales being 500 units per month.

During the first few months, since the seller has already successfully sold 4000 smartphone units, high demand for the smartphones is evident.

Since the supply is limited to 1000 units only in a month and the quantity demanded being more as is evident by 4000 units being pre sold, during the initial phase, this would create a high demand.

And since the supply is limited, the seller will have to increase the price as the demand is lot more.  

7 0
3 years ago
A conservative investor has a portfolio that consists of diversified investments in equity securities, debt securities, and mone
satela [25.4K]

Answer:

Real Estate-Related Investments.

Explanation:

Real estate related investments involves the purchase, management, renting and sale of real estate properties with the aim of making profit.

Real estate investment is capital intensive and has low liquidity compared to other forms of investment.

This will be a good option for the conservative investor because real estate investment is stable and not prone to huge losses that can be incurred in the money markets. Also real estate is not affected by equities market. So will be a safety net in case of failure in the equity market.

4 0
3 years ago
If you calculate the cost of attendance (COA) at an institute of higher
lutik1710 [3]
The answer is tuition fees, room and board, books, supplies and other expenses.
6 0
2 years ago
PLEASE HELP ME
Olin [163]

Answer:

i clicked on this when i didnt mean to and i dont know how to exit

Explanation:

6 0
3 years ago
Katie Simpson: Do you have time to meet this afternoon? Carl Mendoza: Sure. What’s up? Katie Simpson: We need to finalize the Ba
Ksenya-84 [330]

Answer:

Yes

Explanation:

Based on the given details of the conversation that transpired between Katie Simpson and Carl Mendoza we can vividly say that  the preceding IM transcript apply professional best practices reason been that Katie Simpson who is the caller went straight to point  to the main reason why she called the receiver which is Carl Mendoza, And during the course of the preceding TRANSCRIPT the proper use of grammers and words , spelling, full stop, exclamation mark and question mark were on point and  accurate.

6 0
3 years ago
Other questions:
  • A(n) _____ is central to individuals and organizations of all sizes and ensures that information can be shared across all busine
    6·1 answer
  • As the name suggests, convertible bonds allow the owner the option to convert the bonds into a fixed number of shares of common
    12·1 answer
  • Simon and his managers are discussing the unemployment, inflation, and interest-rate trends that might affect their chain of san
    8·1 answer
  • The Tuck Shop began the current month with inventory costing $19,000, then purchased inventory at a cost of $52,950. The perpetu
    6·1 answer
  • A util is an artificial construct used as a means of measuring the A. costs of producing a good B. price of a good C. satisfacti
    11·1 answer
  • PandemicsPlus just paid a dividend of $1.00 per share and they consistently grown dividends at 4% annually. Investors require a
    11·1 answer
  • Trade industry short note​
    7·1 answer
  • A town has a tax base of $411,000,000 and a budget of $850,000. What is the tax rate in terms of mills
    12·1 answer
  • the cost of sunflower seeds has increased. sunflower seeds are an input when sunflowers are produced. explain how this change wi
    9·1 answer
  • if 14.6 million people are unemployed, 155.5 million people are employed, and 7.9 million people are institutionalized, what is
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!