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KatRina [158]
3 years ago
12

How much should you pay for a share of stock that offers a constant growth rate of 13%, requires a 18% rate of return, and is ex

pected to sell for $50 one year from now?
Business
1 answer:
marin [14]3 years ago
5 0

Answer:

$44.25

Explanation:

<u>procedure 1:</u>

we can determine the present value of the stock using the following formula:

present value = future value / (1 + constant growth rate)ⁿ

  • future value = $50
  • constant growth rate = 13%
  • n = 1

present value = $50 / (1 + 13%) = $50 / 1.13 = $44.25

<u>procedure 2 (optional):</u>

future value = future dividend / (required rate of return - constant growth rate)

$50 = future dividend / (18% - 13%)

future dividend = $50 x 5% = $2.50

now we must determine the dividend for the current year:

current dividend = future dividend / (1 + constant growth rate)

current dividend = $2.50 / (1 + 13%) = $2.50 / 1.13 = $2.21

now we apply the Gordon growth model:

present value = dividend / (required rate of return - constant growth rate)

present value = $2.21 / (18% - 13%) = $2.21 / 5% = $44.25

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$14,900

Explanation:

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More than ________ percent of those holding patents win their infringement suits.
lara31 [8.8K]
<span>The correct answer is 60%.

Over 60% of patent holders are successful when bringing infringement suits. This high rate of success ensures that patent holders receive just compensation for their work and that others cannot wrongfully benefit from their ideas. A successful patent infringement suit can require the defendant to pay monetary damages to the patent holder in addition from stopping their wrongful use of the patent.</span>
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<h3>Question:</h3>

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Explanation:

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