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raketka [301]
3 years ago
12

Over the next three years, Distant Groves will pay annual dividends of $.65, $.70, and $.75 a share, respectively. After that, d

ividends are projected to increase by 2 percent per year. What is one share of this stock worth today at a required return of 14.5 percent
Business
1 answer:
olganol [36]3 years ago
6 0

Answer:

The share is worth $5.68 today.

Explanation:

The current price of the stock can be calculated using the DDM or dividend discount model. The DDM values the stock based on the present value of the expected future dividends from the stock.

The following is the formula for the price of the stock today,

P0 = D1 / (1+r)  +  D2 / (1+r)^2  + ... +  Dn / (1+r)^n  +  Terminal value / (1+r)^n

The terminal value is the cumulative value of all the future dividends calculated when the dividend growth becomes zero or constant. In case the dividend growth becomes constant, like in this case, the terminal value is calculated as follows,

Terminal value = Dn * (1+g) / r - g

Where,

  • g is the Constant growth rate in dividends

So, the price of this stock today is,

P0 = 0.65 / (1+0.145)  +  0.70 / (1+0.145)^2  +  0.75 / (1+0.145)^3  +  

((0.75 * (1+0.02) / (0.145 - 0.02)) / (1+0.145)^3

P0 = $5.678 rounded off to $5.68

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Why do you think the Federal government taxes long-term capital gains and qualified dividends at a lower rate than earned
shusha [124]

Answer:

The justification for a lower tax rate on capital gains relative to ordinary income is threefold: it is not indexed for inflation, it is a double tax, and it encourages present consumption over future consumption. ... Future personal consumption, in the form of savings, is taxed, while present consumption is not.

Explanation:

8 0
3 years ago
The closing process is also known as which of the following?
Alex

Answer:

A. Project completion is the answer

plz mark me as brainliest

3 0
3 years ago
Read 2 more answers
in may 2021, sandra's office was burglarized, and she determined that approximately $21,000 of equipment was taken. in september
victus00 [196]

The replacement period ends on December 31,2023 based on the information given about the insurance.

<h3>How to explain the information?</h3>

It should be noted that the replacement period is the period beginning and ending the reimbursement of an equipment.

It should be noted that the replacement will begin on the date when the equipment was stolen. In this case, it will then end two years after the close of the first tax year where the part of gain is realized.

Therefore, the replacement period ends on December 31,2023

Learn more about insurance on:

brainly.com/question/25855858

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Options

A) September 30, 2023

B) December 31, 2023

C) December 31, 2022

D) December 31, 2021

5 0
2 years ago
What would be the total interest earned and the total percent yield for the time period for the following problem? Remember that
lidiya [134]

The balance in Marty’s account will be $1330

Simple interest= (P x R x T) / 100

Where,

P = Principal = $1,000

R= Rate = 7.2%

T = Time = 55 months =  4.583333 years.

Simple Interest = (1000 x 7.2 x 4.58) / 100

=$329.76 = $330 (approx.)

Amount = Principal + Simple Interest

=$1000 + $330

=$1330

What is Simple Interest?

Simple interest is calculated based on a loan's principal or the initial deposit into a savings account. Simple interest doesn't compound, so a borrower will never have to pay interest on the interest already accumulated because a creditor will only pay interest on the principal amount.

How do I calculate simple interest?

Simplified interest (S.I.) is computed using the following formula: S.I. = P*R *T, where P stands for principal, R for the annual percentage rate of interest, and T for time, which is typically expressed as the number of years. Written as r/100, the interest rate is expressed as a percentage, or r%.

Learn more about Simple Interest: brainly.com/question/25845758

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8 0
2 years ago
If a country's economic data shows private savings of $990 million, government spending of $999 million, tax revenue of $699 mil
balandron [24]

Answer:

Investment is equal to 890 million.

Explanation:

Investment refers to the money that is used to produce goods. Investment can be calculated by adding the private savings, the public savings that is determined by subtracting the government spending to the taxes received and the trade deficit that refers to the imports minus the exports.

I= S+(T-G)+(M-X)

S= private savings

T= net taxes

G= government spending

M= imports

X= exports

I= 990+(699-999)+(600-400)

I=990-300+200

I= 890

4 0
3 years ago
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