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
Steady-state means:
Setler [38]

Answer:

the price of bonds will tend to

fall!

Explanation:

the price of bonds will tend to

fall!investment the price of bonds will tend to

fall!the price of bonds will tend to

fall!investment = depreciationinvestment = depreciationinvestment = depreciationthe price of bonds will tend to

fall!investment = depreciationinvestment = depreciationinvestment = depreciationinvestment = depreciationinvestment = depreciation depreciation

7 0
2 years ago
Your friend wants to open a clothing shop. A necessary capital resource is a
saw5 [17]

Answer: Your friend wants to open a clothing shop. A necessary capital resource is a <u>place to open the shop.</u>

Explanation: Capital is the element constituted by money and infrastructure, which are needed to take advantage of human and natural resources in the productive process, considered as essential by the capitalists, since without money and other economic resources, companies cannot settle and industries, because they need it to have facilities, furniture, machinery, buy raw materials, pay staff, and so on.

6 0
3 years ago
Sparty Corporation has provided the following information for its most recent year of operation: Revenues earned were $88,000, o
AlekseyPX

The amount of net income reported on Sparty's income statement is $19,690.

<h3>What is revenue?</h3>
  • The total amount of income earned by the sale of goods and services connected to the principal operations of the firm is referred to as revenue in accounting.
  • Commercial revenue is often known as sales or turnover.
  • Some businesses make money by charging interest, royalties, or other fees.
<h3>What are dividends?</h3>
  • A dividend is a profit distribution made by a corporation to its shareholders.
  • When a corporation makes a profit or has a surplus, it can pay a portion of the earnings to shareholders as a dividend.
  • Any money that is not dispersed is re-invested in the company.
<h3>Solution -</h3>

To find the amount of net income reported on Sparty's income statement, use the following formula:

Net Income = Gross Profit — Operating Expenses — Other Business Expenses — Taxes — Interest on Debt + Other Income

Net income = 80000 - 31000 - 11000 - 18130 = 19690

Therefore, the amount of net income reported on Sparty's income statement is $19,690.

Know more about net income here:

brainly.com/question/25906113

#SPJ4

4 0
2 years ago
Molteni Motors Inc. recently reported $3 million of net income. Its EBIT was $6.75 million, and its tax rate was 40%. What was i
blsea [12.9K]

Answer:

Interest= $1750000

Explanation:

We know that:

EBIT

interest (-)

=earnings before taxes

tax (-)

=Net profit

EBIT= 6750000

Interest= ?

t= 0,40

Net profit= 3000000

interest= [netprofit/(1-t)]- EBIT

interest= (3000000/0,60)-6750000

interest= 1750000

Tax=(EBIT-interest)*0,35= 2000000

7 0
3 years ago
Cosmetics makers focus on the unique needs of customers of different ages. The cosmetics makers recognize the importance of ____
solniwko [45]

Answer:

market segments

Explanation:

Market segments -

It refers to the portion of people , who have some common features , are referred to as market segment .

Where the market is segmented on the basis of some uniques characteristics in order to stand out in the competitive world .

Hence , from the given scenario of the question.

Cosmetics are designed according to the particular age age group , showcasing to be an example of market segments.

8 0
3 years ago
Other questions:
  • which of the following statements about taxes is FALSE? A-Taxes are collected a the local, state and federal level. B-Some state
    11·2 answers
  • What is the unit cost per tire when 4,000 tires are produced?
    13·1 answer
  • When a temporary negative supply shock hits the economy​ ________.
    5·1 answer
  • Fox Co. had 120,000 shares of common stock outstanding at January 1. On July 31, it issued 60,000 additional shares of common st
    14·1 answer
  • Kaycom, Inc. reports the following information:
    7·1 answer
  • Your parents put $300 into an account paying 11 percent interest for you when you were ten. Ten years later they tell you that y
    9·1 answer
  • Which of the statements below concerning a sole proprietorship is true?
    9·1 answer
  • !!50 Points answer quickly!!
    6·1 answer
  • The field of accounting that focuses on providing information for external decision makers is.
    12·1 answer
  • In the figure below, ∆LMN is an equilateral triangle, side \overline {LM} LM is bisected by O, side \overline {LN} LM is bisecte
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!