Answer:
Po = <u>D1</u> + <u>D2</u> + <u> D3</u>
(1 + Ke) (1 + Ke)2 (1 + Ke)3
Po = <u>$12</u> + <u>$12.50</u> + <u>$28
</u>
(1 + 0.1) (1 + 0.1)2 (1 + 0.1)3
Po = <u>$12</u> + <u>$12.50</u> + <u>$28</u>
1.1 (1.1)2 (1.1)3
Po = $10.91 + $10.33 + $21.04
Po = $42.28
Explanation:
The current stock price is a function of future dividends capitalised at the cost of capital of the company of 10% for a period of 3 years.
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The cause was the huge increase of mortgage rates and caused the economy to crash. also Obama. no just kidding only idiots ay that it was him because he hadn't been the president for a year yet so yeah.
Answer:
r = 0.1560652001 or 15.60652001% rounded off to 15.61%
Explanation:
Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,
P0 = D0 * (1+g) / (r - g)
Where,
- D0 * (1+g) is dividend expected for the next period
- r is the required rate of return
or market rate of return
Plugging in the values for P0, D1, and g, we can calculate the value of r or market rate of return on the stock to be,
37.73 = 3.70 / (r - 0.058)
37.73 * (r - 0.058) = 3.7
37.73r - 2.18834 = 3.7
37.73r = 3.7 + 2.18834
r = 5.88834 / 37.73
r = 0.1560652001 or 15.60652001% rounded off to 15.61%
Amount in the bank $23479
amount deposited is 25% this will be equal to:
25/100*23479
=$5869.75
The total amount in the bank is:
23479+5869.75
=$29348.75
the percentage she must withdraw for her to remain with the initial amount is:
5869.75/29348.75
=0.2
=20%