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Basile [38]
3 years ago
6

Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $3.12 per share, and its annual dividend is expected to grow at a consta

nt rate (g) of 6.50% per year. If the required return (r s ) on SCI’s stock is 16.25%, then the intrinsic value of SCI’s shares is
Business
1 answer:
pogonyaev3 years ago
5 0

Answer:

Intrinsic Value = $33.23

Explanation:

<em>The intrinsic value of a stock using the dividend valuation model is the present value of the the future dividend expected from the stock discounted at the required rate of return. </em>

This model is represented as follows  

D(1+g)/(r-g) = P  

Price, D- dividend payable in now, ke- required rate of return, g- growth rate

D- 3.12 , g-6.50% r-6.25%

Intrinsic value = (3.12× 1.065)/(0.1625-0.065)= $33.228

Intrinsic Value = $33.23

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4 0
2 years ago
A company issues $60,000 of 6%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year
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Decrease, $2,000

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A year​ ago, the Really Big Growth Fund was being quoted at an NAV of ​$21.98 and an offer price of ​$22.90. ​Today, it's being
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