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
skad [1K]
4 years ago
14

Hot Wings, Inc., has an odd dividend policy. The company has just paid a dividend of $5.85 per share and has announced that it w

ill increase the dividend by $10.75 per share for each of the next four years, and then never pay another dividend. If you require a return of 12 percent on the company’s stock, how much will you pay for a share today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price $
Business
2 answers:
GalinKa [24]4 years ago
6 0

Answer:

The present intrinsic value of the share is 94.79 dollars

Explanation:

We need to discount the future dividends at the required rate of return

\left[\begin{array}{ccc}Year&Cashflow&Discounted\\0&5.85&\\1&16.6&14.82\\2&27.35&21.8\\3&38.1&27.12\\4&48.85&31.05\\TOTAL&&94.79\\\end{array}\right]

Each year is discount according to the lump sum formula

\frac{cashflow}{(1 + rate)^{time} } = PV

being rate 12% --> 0.12

\frac{16.6}{(1 + 0.12)^{1} } = 14.82

\frac{27.35}{(1 + 0.12)^{2} } = 21.8

and so on

Elodia [21]4 years ago
4 0

Answer: $94.79

Explanation:

Given the following ;

Current dividend = $5.85 per share

Yearly increment in dividend = $10.75 per share

Number of years = 4

Time (t) = 1-4

Internal rate of return = 12%

Calculate the present value of share given the above details

Cashflow over four years

Year1 = $5.85 + $10.75 =$16. 60

Year2 = $16.60 + $10.75 = $27.35

Year3 = $27.35 + $10.75 = $38.10

Year 4 = $38.10 + $10.75 = $48.85

Present value (PV) =

Cashflow÷(1+IRR) + cashflow÷(1+IRR)^t + cashflow÷(1+IRR)^t + cashflow÷(1+IRR)^t

Present value (PV) =

Year1÷(1+IRR) + year2÷(1+IRR)^2 + Year3÷(1+IRR)^3 + Year4÷(1+IRR)^4

PV = $16.60/(1.12) + ($27.35)/(1.12)^2+ $38.10/(1.12)^3 + $48.85/(1.12)^4 = $94.79

You might be interested in
According to the Marketing Concept, a. Companies produce only what customers want. b. A company should produce only basic produc
shepuryov [24]

Answer:

The answer is A

Explanation:

Companies should produce what customers want based on the marketing concept. Companies and customers are dependent on each other. Companies should focus on producing goods which consumers/customers want. These companies should think of what consumers want and the prices they would pay since it is the consumer that creates demand for goods and services that are produced by the company.

Therefore companies should produce only what consumers want else they would produce goods and services with little demand.

8 0
3 years ago
When Treasury bills are auctioned off, if buyers are willing to pay $900 for a $1,000 treasury bill, the government is being ask
andriy [413]

The government is paying 10% in interest.

What interest on Treasury bills?

The interest on Treasury bills compares the interest earned by the investor to the face value of the T-bill, in other words, it is determined as the interest(i.e. face value-purchase price) divided by the face value.

From an investor's perspective, I mean the person  buy purchasing the T-bill, his rate of return is the interest divided by the amount invested, which is the purchase price.

Interest=face value-purchase price

face value=$1,000

purchase price=$900

interest=$1000-$900

interest=$100

government's interest rate=interest/face value

government's interest rate=$100/$1000

government's interest rate=10%

In other words, the government by a way of issuing the bills is paying interest of 10% to the lenders

Read more on bonds generally including government bond on:brainly.com/question/22013938

#SPJ1

4 0
2 years ago
Before starting a business, an entrepreneur should consider the following sacrifices: a. Professional b. Financial c. Personal d
andrey2020 [161]

Answer:

D. All of these are correct

Explanation:

Because truly before starting a business, an entrepreneur should consider the professional sacrifices as competence and expertise is a key factor in building an excellent business. Entrepreneurs need to have the know-how of their business or better still get able hands to handle it for them.

Setting up a Business would require some financial commitment. One which many atimes might not be convenient especially at the kick-off of the business. It's would a season of continuous investment not necessarily a season for profit making.

Personal sacrifice would be heavily needed and hence must be considered. Before starting a business, you must consider the sleepless nights, forgone comfort, play time and certain discipline you must imbibe if growing the business is indeed what is desire.

8 0
3 years ago
A sunk cost: Requires a current outlay of cash. Is the lost benefit of choosing an alternative course of action. Is irrelevant i
igor_vitrenko [27]

Answer:

Is irrelevant in decision making

Explanation:

Since the suck cost is the cost that no longer is recovered so it should not be a factor to consider when making a decision. For example, you have bought a cinema ticket for this evening, but it is heavily rainy so you may get sick if you go to the cinema. The fact that you have paid for this ticket should not consider whether to go or stay home since you can not get this amount of money no matter what happens.

5 0
3 years ago
Khái niệm giao tiếp trong tổ chức
Delvig [45]

Answer:

bu kin jhu

Explanation:

John jvghh bugs HHH jhu UV juggle

6 0
3 years ago
Other questions:
  • Dell first chooses whether to offer Symantec $30 or $20 for each copy of its software, and then Symantec responds by either acce
    14·1 answer
  • Bob is the CEO of ABC Hydraulics. Bob is committed to ethical business practices. He ensures that his investors are kept well-in
    14·1 answer
  • what is the government-regulated distribution of a good that is in low supply. A. Surplus B. Shortage C. Rationing D. Price floo
    8·2 answers
  • Wildhorse Co, purchases land for $155000 cash, Wildhorse assumes $4900 in property taxes due on the land. The ttle and attorney
    8·1 answer
  • Pat has Been riding informal proposals for more than 20 years. At feels that many people forget the call for action and present
    12·1 answer
  • 1 Madison Harris, the owner, invested $6,500 cash and $33,500 of photography equipment in the company in exchange for common sto
    12·1 answer
  • Three $1,000 face value, 10-year, noncallable, bonds have the same amount of risk, hence their YTMs are equal. Bond 8 has an 8%
    5·1 answer
  • The information below is provided for Sea Company:_________. Year Ending Inventory End- of-Year Prices Cost Index 2017 $ 90,000
    14·1 answer
  • Which is not a type of payroll deduction?
    6·2 answers
  • Which of the following industries faces the strongest threat from new entrants?
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!