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arsen [322]
3 years ago
13

Newton, Inc. just paid an annual dividend of $0.95. Their dividends are expected to increase by 4% annually. Newton Company stoc

k is selling for $11.54 a share. What is the required rate of return on this stock implied by the dividend-growth model
Business
1 answer:
Eduardwww [97]3 years ago
8 0

Answer:

The required rate of return is 12.2%

Explanation:

Dividend growth model is used to calculate the price of the stock based on the dividend, its growth and required rate of return.

Formula to calculate the price

Price = Dividend / ( Required rate of return - Growth rate )

P = D / ( r - g)

P = $11.54

D = $0.95

g = 4%

Now placing the given values in the formula

$11.54 = $0.95 / ( r - 4% )

r - 4% = $0.95 / $11.54

r - 4% = 8.2%

r = 8.2% + 4%

r = 12.2%

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Answer:

$500 loss

Explanation:

Since you purchased a call contract for IBM stock, you had the option to buy IBM stock at a specified price ($125) within a specified time (?). The problem is that the price of your call contract was higher than the market price at that specific date. Obviously you will not exercise your option in order to limit your losses.

long call profit = Max [0, (current stock price - strike price) x number of shares] - premium paid)

where:

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long call profit = Max [0, ($123 - $125)(100)] - $500 = -$500

6 0
2 years ago
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Answer: The correct answers are "Out-group", "Participating style" and "Delegating style".

Explanation:

<u>1. Out-group:</u> you are frustrated at work because you feel that your supervisor only assigns you the mundane tasks and that you receive less support from her than do your teammates.

<u>2. Participating style:</u> you feel that your staff members are interested in assuming more responsibility and are ready to handle it so you start letting them share in more team decisions.

<u>3. Delegating style</u>: because your staff has been working together in their jobs for a long time and have a high degree of motivation, experience, and skill, you let them work pretty independently and try to stay out of their way.

3 0
3 years ago
One major role of firms is to manage risk. Consumers do not want to pay for products of unknown quality or where the delivery da
Sav [38]

Answer:

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Explanation:

Uncertainty is defined as a state of decision making in which the nature of things are unknown, the extent and magnitude of circumstances are unpredictable and reasonable probabilities cannot be used to determine outcomes.

Uncertainty is a challenge when there is too much uncertainty and business cannot determine outcomes.

However manageable uncertainty can help a business come up with creative decisions that will benefit the business.

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Let's assume the car costs $15,000 and it takes 3 years to pay it.
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The answer is
<span>A. Mike's decision reduced the total cost of his loan as much as possible because the first loan has a lower interest rate.
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5 0
2 years ago
What is the study of business​
REY [17]

Explanation:

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2 years ago
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