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mixer [17]
3 years ago
13

Orwell building supplies' last dividend was $1.75. Its dividend growth rate is expected to be constant at 34.00% for 2 years, af

ter which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price? Select the correct answer. a. $49.93 b. $49.39 c. $48.85 d. $47.77 e. $48.31

Business
1 answer:
xxMikexx [17]3 years ago
8 0

Answer:

Price of the stock today = $48.85 and option c is the correct answer.

Explanation:

The current price of the stock can be computed using the two stage dividend growth model of the DDM approach. The DDM or dividend discount model values a stock based on the present value of the expected future dividends from the stock.

The formula for the price of the stock today using the two stage growth model is attached.

Price of the stock today = 1.75 * (1+0.34) / (1+0.12) + 1.75 * (1+0.34)^2 / (1+0.12)^2 + [ (1.75 * (1+0.34)^2 * (1+0.06)) / (0.12 - 0.06) ] / (1+0.12)^2

Price of the stock today = $48.85

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Answer:

Variable cost per unit= $0.10

Explanation:

Giving the following information:

Cost Machine Hours

March $3,106 15,176

April 2,668 9,558

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June 3,538 17,899

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Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

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Variable cost per unit= $0.10

8 0
3 years ago
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saveliy_v [14]
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(this circumtances won't happen if the reason you lost the money is the firm going into bankruptcy)
7 0
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Mini Case Study-Walmart GoLocal
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Answer:

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The natural rate of unemployment is 4%, and the economy is producing 95% of its potential output. Okun's law predicts an unemplo
Anon25 [30]

Answer:

so correct option is C. 6.5

Explanation:

given data

natural rate of unemployment = 4%

economy producing = 95%

solution

we know here as  Okun's law for the every 1 percentage increase in unemployment rate

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but here is country GDP = 5% lower than potential GDP

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