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Ilia_Sergeevich [38]
3 years ago
12

Michael's, Inc., just paid $2.55 to its shareholders as the annual dividend. Simultaneously, the company announced that future d

ividends will be increasing by 5.5 percent. If you require a rate of return of 9.7 percent, how much are you willing to pay today to purchase one share of the company's stock?
Business
1 answer:
tiny-mole [99]3 years ago
4 0

Answer:

$64.05

Explanation:

The computation of the today share is shown below:

= {Current year dividend × ( 1 + growth rate)} ÷ (Required rate of return - growth rate)

= {$2.55 × ( 1 + 5.5%)} ÷ (9.7% - 5.5%)

= ($2.55 × 1.055) ÷ (9.7% - 5.5%)

= 2.69025 ÷ 4.2%

= $64.05

The {Current year dividend × ( 1 + growth rate)} reflect the next year dividend

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If an activity generates a positive externality, the government can increase total economic surplus by ___ the activity, and if
Fofino [41]

Answer:

C. subsidizing: taxing

Explanation:

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Example of activities that generate positive externality are education and research.

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8 0
3 years ago
Ric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of hol
lutik1710 [3]

Answer: An investment that matures in five years

Explanation:

Both investments may be of equal risks, but by virtue of having different maturity dates, they will not be priced the same.

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