1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Serggg [28]
3 years ago
5

Deployment Specialists pays a current (annual) dividend of $1 and is expected to grow at 22% for two years and then at 5% therea

fter. If the required return for Deployment Specialists is 11.0%, what is the intrinsic value of its stock
Business
1 answer:
AleksAgata [21]3 years ago
8 0

Answer:

The value of the stock = $19.64

Explanation:

According to the dividend valuation model, <em>the value of a stock is the present value of the expected future cash flows from the stock discounted at the the required rate of return.</em>

Year                     Workings                        Present value(PV)

1                 $1 × (1.22)  × 1.11^(-1)  =                     1.10

2                 $1 × (1.22)^2 ×(1.11)^(-2) =                1.21

3                 $1 × ((1.22)^2 × (1.05))/0.11-0.05) = 21.35 ( PV in year 2 terms)

PV (in year 0) of Year 3 dividend  = 21.35 × 1.11^(-2)

                                      = 17.33 (see notes)

<em>The value of the stock</em> = $1.10+ $1.21 + 17.3

                                      = $19.64

Notes:

<em>Note the growth applied to year 3 dividend gives the PV in year 2 terms. So we need to re-discount again to year 0.</em>

<em />

The value of the stock = $19.64

                                     

You might be interested in
In which sequence will events occur when the economy adjusts to an expansionary monetary policy, in the short run and then in th
Kitty [74]

Answer:

1. The Fed uses open market operations to increase the money supply, thus lowering interest rates and stimulating investment.

Expansionary monetary policy is done to stimulate economy by increasing money supply. It lowers interest rates and leaves more money for consumption and investment.

2.  Increased aggregate demand leads to some higher prices and more total output.

Increased AG will lead to prices being higher in response. This would spur producers to produce more thereby increasing output.

3. Sticky input prices adjust to inflation.

Input prices will rise overtime to match the increase in prices.

4. Producers lay off some workers in response to higher input prices, causing a decrease in aggregate supply.

When the inputs rise, production becomes more expensive so producers will have to lay off workers to maintain profitability. They will also supply less goods as a result.

5.  In the long run, equilibrium returns to the same initial production level.

In the long run therefore, the reduction in AS leads to production returning to pre-monetary policy figures.

6 0
3 years ago
During a recent​ month, Cali Company planned to provide cleaning services to 30 customers for $ 31 per hour. Each job was expect
11111nata11111 [884]

Answer:

Option (D) is correct.

Explanation:

Expected Revenue = 30 Customers × 4 hours each × $31 per hour.

                                 = $3,720

Actual Revenue = 40 Customers × 3.5 hours each × $31 per hour.

                            = $4,340

Increased Revenue = $4,340 - $3,720

                                 = $620

Therefore, Cali​'s revenues for the month were 620 more than expected.

5 0
3 years ago
Westover Electric is preparing to pay its quarterly dividend of $2.20 a share this quarter. The stock closed at $57.70 a share t
Lorico [155]

Answer:

$55.72

Explanation:

Data provided:

Quarterly dividend paid per share = $2.20

Closing share cost = $57.70 per share

Relevant tax rate = 10%

The dividend per share after the tax deduction

= (100% - 10%) × Quarterly dividend paid per share

= 0.9 × $2.20

= $1.98

Thus, the ex-dividend stock price

= Closing share cost - dividend per share after the tax deduction

= $57.70 - $1.98

= $55.72

8 0
3 years ago
Net income was $450,000. Beginning and ending stockholders' equity was $4,000,000 and $4,800,000, respectively. Beginning total
Blababa [14]

Answer:

The correct answer is B. 7.143 %.

Explanation:

Return on assets is a profitability ratio that provides how much profit a company is able to generate from its assets. In other words, return on assets (ROA) measures how efficient a company's management is in generating earnings from their economic resources or assets on their balance sheet. ROA is shown as a percentage, and the higher the number, the more efficient a company's management is at managing its balance sheet to generate income.

The formula to calculate it is given below.

ROA = Net Income/Average total asset * 100

        = 450,000/ 6,300,000*

        = 7.14 %

*= (6,000,000 + 6,300,000)/2

7 0
3 years ago
How might external and internal environmental factors influence the strategic plan? Highlight the basic differences between vert
alexgriva [62]

Answer:

External factors like the economy, politics, competitors, customers, and even the weather and internal factors such as staff, company culture, processes, and finances can influence an organization's Strategic Plan.

Explanation:

  • The vertical and horizontal external business environment is composed of economic, political and legal, demographic, social, competitive, global, and technological factors while the organization's culture, product development, mission and strategy are all part of the internal institutional, resource-dependent, and contingent environments.
  • Vertical and horizontal external environments are generally beyond the control of management and change constantly compared to internal institutional, resource-dependent, and contingent environments that managers have a great deal of control over.

A health leader operating in these environments can leverage on continuous study on how to adapt to the external business environment to ensure success

5 0
3 years ago
Other questions:
  • Why do pre-construction and design specialists typically take an interdisciplinary approach to their work?
    14·1 answer
  • A portfolio is consisted of two stocks:$1,000 in stock X and $3,500 in stock Y. The expected return on stock X is 12%, and 6% fo
    9·1 answer
  • Total assets of Charter Company equal $710,000 and its equity is $425,000. What is the amount of its liabilities? b. Total asset
    13·1 answer
  • For each event listed below, identify the accounts that should be used to record the economic event and the dollar amount for th
    8·1 answer
  • Which of the following is a capital expenditure? Payment of an account payable. Retirement of bonds payable. Payment of Federal
    15·1 answer
  • Entreprenewship is a process of<br>to<br>birth<br>to<br>an<br>entreprise. Discuss​
    10·1 answer
  • A useful way of standardizing financial statements is to choose a ____ and then express each item relative to the _____.
    9·1 answer
  • Write up to 500 word describe why business comunication play a important role in business major.
    15·1 answer
  • In the new highly competitive business environment, the planning function is described as ______.
    7·1 answer
  • For the following transaction, determine whether cash flows from operating activities will increase, decrease, or remain the sam
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!