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Strike441 [17]
3 years ago
8

​(Related to Checkpoint​ 10.1) ​(Common stock valuation​) Header​ Motor, Inc., paid a ​$2.71 dividend last year. At a constant g

rowth rate of 5 ​percent, what is the value of the common stock if the investors require a 15 percent rate of​ return?
Business
1 answer:
zhuklara [117]3 years ago
8 0

Answer:

The value of the common stock today is $28.455 per share.

Explanation:

For a stock that is paying constant growth rate in dividends, we use the constant growth model of the DDM to calculate the value of stock today. The formula for price using the constant growth model is,

Price = D1 / r - g

Where,

  • D1 is the dividend expected in the next period or D0 * (1+g)
  • r is the cost of equity or required rate of return
  • g is the growth rate in dividends

Price = 2.71 * ( 1 + 0.05 )  / (0.15 - 0.05)

Price = $28.455

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An increase in common stock would be reflected in the statement of stockholders' equity. Select one: True False
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Answer:

The answer is true.

Explanation:

And increase or decrease in common stock or shareholders' equity is shown under statement of stockholders' equity.

It tells us the changes that happened from the beginning of the year till year ending.

It tells us how retained earnings decrease or increase, the dividend paid for the year, changes in common equity.

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3 years ago
If you invest P dollars and you want the investment to grow to A dollars in t years, the interest rate that must be earned if in
hoa [83]

Answer: 18.92%

Explanation:

The formula to find the compound amount :-

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Given : P= $1500

A = $6000

Time = 8 years

Then 6000=1500(1+r)^8

i.e. (1+r)^8=\dfrac{6000}{1500}=4

i

Taking natural log on both sides , we get

\Rightarrow\ 8\ln(1+r)=\ln(4)\\\\\Rightarrow\ \log(1+r)=\dfrac{\log4}{8}=\dfrac{1.38629436112}{8}=0.17328679514\\\\\Rightrarrow\ 1+r=e^{0.17328679514}\\\\\Rightarrow\ 1+r=1.189207115\\\\\Rightarrow\ r=1.189207115-1=0.189207115\\\\\Rightarrow\ r\approx0.1892\approx18.92\%

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3 years ago
Which of the purchases is more likely to be paid for with a credit card?
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Probably something with a huge value 
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Function of financial system?​
Flura [38]

Answer:

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(can u flag me)

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IRISSAK [1]

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The correct answer is letter "C": is the result of both genetic and environmental factors.

Explanation:

There have been several studies about human evolution as a species. It is inevitable to relate this topic to the prominent findings of Charles Darwin (1809-1882) in his book "<em>On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life</em>" or simply known as the <em>Origin of species</em>. Mainly, Darwin sustained that, in general, <em>species' evolution happens thanks to environmental adaptations that are transmitted from one generation of a species to another in their genetics.</em>

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