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
loris [4]
3 years ago
14

Company B is expected to pay a dividend of $2 per share at the end of year 1 and the dividends are expected to grow at a constan

t rate of 4 percent forever. If the current price of the stock is $20 per share, calculate the expected return (i.e., the cost of equity capital for the firm)
Business
1 answer:
4vir4ik [10]3 years ago
6 0

Answer:

The answer is 14%

Explanation:

This will be solved by Dividend discount model based approach

re = D1/Po + g

where re is the rate of return

D1 is expected dividend($2)

Po is the current market value of equity($20)

g is the expected growth rate of dividend(4% or 0.04)

2/20 + 0.04

0.1 + 0.04

= 0.14

Expressed as a percentage is

0.14 x 100

14%

Therefore, the expected return is 14%

You might be interested in
1. A stock has an expected return of 10.2 percent, the risk-free rate is 4.1 percent, and the market risk premium is 7.2 percent
NNADVOKAT [17]

Answer:

Beta is  0.85  

Explanation:

The value of Beta can de derived from the CAPM formula of expected return

expected return=risk-free rate+Beta*market risk premium

expected return  is 10.2%

risk-free rate is 4.10%

market risk premium is 7.2%

Beta is unknown

10.20%=4.10%+Beta*7.20%

10.20%-4.10%=Beta*7.20%

6.10% ==Beta*7.20%

Beta=6.10% /7.20%

Beta= 0.85  

5 0
3 years ago
Although GDP is a reasonably good measure of a nation's output. It does not necessarily include all transactions and production
Scorpion4ik [409]

Answer:

Options (a), (b) and (d) are correct.

Explanation:

Gross domestic product refers to the total value of production of goods and services during a period of time within the boundaries of the nation. GDP of a nation also represents the standard of living of that nation. If the GDP of a nation increases then it is assumed that the standard of living of that nation also increases.

But there are some flaws or loopholes in this assumption as non-marketing activities and the underground economy makes the GDP an imperfect measure of a particular economic activity.

Is doesn't includes the quality of goods received by the consumers as it doesn't contribute towards GDP of a nation.

It doesn't takes into account the non-market activities such as self service and house work. If a person is cleaning his home then this doesn't contribute towards GDP but if he hires someone to do the same job then then this will contribute towards the calculation of GDP as it is counted as a consumption expenditure.

Loss of enjoyment will also not counted while determining the GDP.

Government pay checks to soldiers will be included in the GDP because it increases the GDP of a nation.

8 0
3 years ago
Inventory and safety stock planning ________. leads to the development of the overall demand forecast leads to the development o
NARA [144]

<u>Answer: </u>leads to the development of a sourcing plan

<u>Explanation:</u>

Inventory planning includes the safety stock planning. Safety stock planning means the additional maintenance of the stock to avoid the situation of being completely out of stock when needed. Safety stock acts as the buffer stock during the times of unexpected sudden increase in demand.

Through inventory and safety planning the goods can be accumulated based on the sale or the production of the firm. These things lead to the development of the source planning.

8 0
3 years ago
You think that in 15 years it will cost $214,000 to provide your child with a 4-year collge education. Will you have enough if y
prisoha [69]

Answer:

You will not have enough.

Explanation:

The rate of the investment is compounded, so the value at year 1, will be the value at year 0, increased in a 4%. Then, the value at year 2 will be the value at year 1, increased in other 4%, that's equal to the value at year 0 increased twice at 4%.

So, the formula to calculating the value at year 15 is 75,000*(1.04)^15 = 135,070.63. THen, it will not be enough. You have to invest at least 214,000/1.04^15 = 118,826.20 at year 0, at a rate of 4%.

8 0
2 years ago
How does the automated system improve the efficiency and timeliness of financial <br> statements?
stich3 [128]
Ceee
 nam inteles scuze nu stiu

4 0
3 years ago
Other questions:
  • On January 2, 2020, Howdy Doody Corporation purchased 12% of Ranger Corporation's common stock for $50,000. Ranger's net income
    15·1 answer
  • Linda and Richard are married and file a joint return for 2019. During the year, Linda, who works as an accountant for a nationa
    12·1 answer
  • On January 1, 2018, Red Inc. issued stock options for 280,000 shares to a division manager. The options have an estimated fair v
    14·1 answer
  • Using reasonable safeguards to protect phi from being accidentally released to those who do not need access to the information d
    11·1 answer
  • You are part of a sales group that has been asked to give a presentation.
    8·1 answer
  • Someone who is young, lacks funds, and really wants to gain technical skills while serving his or her nation should consider
    10·1 answer
  • Tom Gregory is the practice manager for a local urologist. The practice has a detailed set of financial policies dealing with re
    11·1 answer
  • Write a letter to your father asking for money to buy textbooks and pay for your school fees​
    5·1 answer
  • re-thinking oil: compensation for non-production in yasuní national park challenging sumak kawsay and degrowth
    15·1 answer
  • If an organization wanted to improve employee involvement, efficiency, and customer satisfaction, what kind analysis might they
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!