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mestny [16]
3 years ago
11

ABC Inc. just paid a dividend of $1.00 this year. The stock price is $15.43 currently. The market risk premium is 15% and the ri

sk-free rate is 6%. What will the price of ABC's stock be if the dividend growth increases by 25%?
Business
1 answer:
mariarad [96]3 years ago
4 0

Answer:

Price lowers and becomes negative or -5.37 dollars

Explanation:

Market risk premium's formula could be written as dividends/price + dividend's growth rate. Therefore, we dividend growth rate according to the current price and dividend level equal to market risk premium - dividends/price or 0.15 - 1/15.43 = 0.086 or 8.6%. If the dividend growth rate rises by 25% than new one is 33.6%. Price is equal to dividends/market risk premium - dividend growth rate or in this case 1/0.15-0.336 or 1/-0.186 or -5.37 dollars. If the price is negative that would mean that any future selling of the stock would mean that ABC would have to pay in order to sell it.

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bogdanovich [222]

Answer:

pre-bonus income is $33600

Explanation:

given data

bonus = 20% of net income

income before the bonus = $57600

to find out

pre-bonus income

solution

we know pre income bonus is express as

pre-bonus income = bonous + share of income    ............1

so bonus = 20/120 × 57600 = $9600

and share of net income = 1/2 × ( 57600 - 9600)

share of net income = $24000

so from equation 1

pre-bonus income = bonous + share of income

pre-bonus income =9600+ 24000

pre-bonus income is $33600

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3 years ago
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4 0
3 years ago
What does a budget account for primarily??
madreJ [45]
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6 0
3 years ago
What are the most important benefits of using virtual reality in business training?.
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The most important benefits of using virtual reality in business training is that its let the trainees undergo at similar experience that they will encounter in real world.

<h3>What is a Virtual Reality?</h3>

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6 0
2 years ago
Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December 31, the accounting r
pashok25 [27]

Answer:

cost of goods available for sale= $4,060

Explanation:

Giving the following information:

Beginning inventory, January 1: 400 $3.00

Purchase, January 30: 300 3.40

Purchase, May 1: 460 4.00

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<u></u>

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7 0
3 years ago
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