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zheka24 [161]
3 years ago
15

Common stock​ value: Constant growth The common stock of Barr Labs​ Inc., trades for ​$120 per share. Investors expect the compa

ny to pay​ a(n) ​$1.37 dividend next​ year, and they expect that dividend to grow at a constant rate forever. If investors require​ a(n) 15.8​% return on this​ stock, what is the dividend growth rate that they are​ anticipating?
Business
1 answer:
BlackZzzverrR [31]3 years ago
5 0

Answer:

Dividend growth rate anticipated = 14.66%

Explanation:

Using dividend growth model we have

P{_0} = \frac{D{_1}}{K{_e} - g}

Where P{_0} = Current market price = $120

D{_1} = Dividend to be paid at year end or next year = $1.37

K{_e} = Expected return on equity = 15.8%

g = Expected growth rate

Now putting values we have

$120 = \frac{1.37}{0.158 - g}

0.158 - g = \frac{1.37}{120} = 0.0114

0.158 - 0.0114 = g

0.1466 = g = 14.66%

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Explanation:

Net cash provided by financing activities refers to the difference between the total cash inflows and total cash outflows from the financing activities section of the cash flow staement.

The net cash provided by financing activities can be calculated by preparing a partial cash flow statement as follows:

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