Answer:
The price does the dividend-discount model predict Colgate stock should sell for today is $66.47
Explanation:
In order to calculate the price does the dividend-discount model predict Colgate stock should sell for today we would have to calculate first the Present value of dividend of next 5 years as follows:
Present value of dividend of next 5 years as follows=
Year Dividend Discount factor Present value
a b c=1.085^-a d=b*c
1 $ 1.62 0.921659 $ 1.49
2 $ 1.74 0.849455 $ 1.48
3 $ 1.86 0.782908 $ 1.46
4 $ 1.98 0.721574 $ 1.43
5 $ 2.10 0.665045 $ 1.40
Total $ 7.25
Then, we have to calculate the Present value of dividend after 5 years as follows:
Present value of dividend after 5 years=D5*(1+g)/(Ke-g)*DF5
Present value of dividend after 5 years=$2.10(1+6%)/(8.50%-6%)*
0.665045
Present value of dividend after 5 years=$59.22
Current value of stock=Present value of dividend of next 5 years+ Present value of dividend after 5 years
Current value of stock= $7.25+$59.22
Current value of stock=$66.47
The price does the dividend-discount model predict Colgate stock should sell for today is $66.47
Answer:
Check the explanation
Explanation:
Patents and Copyrights are amortized based on their useful life, not their legal life
It should be noted that Goodwill is not amortized
1. Debit 'Amortization Expense - Copyrights' $15,900 [($79500/ 5)]
Credit 'Copyrights' $15,900
2. Debit 'Amortization Expense - Patents' 18,800 [($112,800 / 5 ) x (10 /12 )]
Credit 'Patents' $18,800
.3. No entry
Answer: 16.55%
Explanation:
Profit margin is the amount of earnings that a company has left when every expenses and costs have been deducted.
From the information given, firstly, we calculate the return on equity. This will be:
= Growth rate /(1 + Growth rate) × Retention ratio
= 8% / (1 + 8%) × 46%
= 0.08/(1 + 0.08) × 0.46
= 0.08/1.08 × 0.46
= 0.08/0.4968
= 0.1610
= 16.10%
Return on equity, ROE = 16.10%
We then calculate the profit margin. This will be:
= ROE / Asset turnover × Equity Multiplier
where,
Equity Multiplier = 1 + debt-equity ratio
= 1 + 0.37 = 1.37
Profit margin = ROE / Asset turnover × Equity Multiplier
= 16.10% / {(1/1.41) × 1.37}
= 16.10% / 0.71 × 1.37
= 0.1610 / 0.9727
= 0.1655
Profit margin = 16.55%
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Payment is a type of annuity that comprises of equal financial flows that happen at regular periods and last forever.
Describe an annuity.
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to know more about annuity
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