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Tema [17]
2 years ago
15

This morning, you purchased a stock that will pay an annual dividend of $1.90 per share next year. You require a 12 percent rate

of return and the annual dividend increases at 3.5 percent annually. What will your capital gain be on this stock if you sell it three years from now?
$2.43 $2.51 $2.63 $2.87 $2.92
Business
1 answer:
Luba_88 [7]2 years ago
8 0

Answer:

The correct answer is $2.43.

Explanation:

The annual dividend is $1.90.

The expected rate of return is 12%.

The growth rate is 3.5%.

The current stock price will be

=\frac{dividend}{required rate of return-growth rate}

=\frac{1.90}{12-3.5}

=\frac{1.90}{0.085}

=$22.35

The stock price at year 3 will be

=\frac{dividend*(1-growth rate)^3}{required rate of return-growth rate}

=\frac{1.90*(1+0.035)^3}{12-3.5}

=\frac{1.90*1.10}{0.085}

=$24.78

The capital gain will be

=stock price at year 3-current stock price

=$24.78-$22.35

=$2.43

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hi your question lacks the options hence i will list out some factors to be considered :

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Explanation:

A network engineer is a professionally trained technology expert that his primary duty is to setup a computer network within an organization that enables the exchange of voice, data and video within the organization.

A network engineer has to consider some factors while performing his duties in other to do an excellent job for the organization and some factors to be considered are. the goal of the network which simply means that the network service required by the organization of what purpose do they want it, the training of the employees on how to use the network is also considered by the engineer the most important which is the budget of the organization and the maintenance of the network after it has been setup.  

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Research indicates that investors who closely monitor their portfolios and trade quickly in response to minor fluctuations in pr
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B. underperform those who hold investments for the long term and trade infrequently.

Research indicates that investors who closely monitor their portfolios and trade quickly in response to minor fluctuations in price underperform those who hold investments for the long term and trade infrequently.

<h3>Why do investors underperform?</h3>

Market timing is the first explanation. Individual investors attempt to decide whether to invest in stocks and when to withdraw funds from them. Despite the fact that we are aware of the market's unpredictability, investors frequently invest during bull markets and exit during down markets. This is seen in the money flows into and out of mutual funds during stock market extremes. Your return will be negatively impacted if you buy high and sell low.

The fees that investors spend are the second factor contributing to their poor market performance. The majority of investors are unaware of their costs and don't care. They fail to understand how a few dollars here and there could possibly make a difference. They believe the fees and charges don't exist since they can't see them.

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Tyson Corporation

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So option 2 is the best option indicating the first purchase sold first.

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