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lora16 [44]
3 years ago
13

Stoneworks, Inc., has an odd dividend policy. The company has just paid a dividend of $6 per share and has announced that it wil

l increase the dividend by $5 per share for each of the next five years, and then never pay another dividend. If you require a return of 15 percent on the company’s stock, how much will you pay for a share today?
Business
2 answers:
olga_2 [115]3 years ago
7 0

Answer:

$71.64

Explanation:

Price of a stock is the present value of all future cash flows receivable from the stock discounted at required rate or return

Present Value factor

= 1 / (1 + r) ^ n

Where,

r = Rate of return = 12% or 0.12

n = Years = 1 to 5

So, PV Factor for year 2 will be

= 1 / (1.12^2)

= 1 / 1.2544

= 0.797194

The following table in the attached file shows the calculations

So, the price of the stock today is $71.64

storchak [24]3 years ago
5 0

Answer:

$65.75

Explanation:

Share value can be determined by calculating the present value of all the dividend associated with the share. The Present value can be calculated by discounting the each years dividend using required rate of return.

As $6 Dividend is paid now and it will increase by $5 each year for next five years

Dividend for each year are

First year dividend = $6 + $5 = $11

Second year dividend = $11 + $5 = $16

Third year dividend = $16 + $5 = $21

Forth year dividend = $21 + $5 = $26

Fifth year dividend = $26 + $5 = $31

Present value of each year dividend:

First year dividend = $11 x ( 1 + 15% )^-1 = $9.57

Second year dividend = $16 x ( 1 + 15% )^-2 = $12.10

Third year dividend = $21 x ( 1 + 15% )^-3 = $13.81

Forth year dividend = $26 x ( 1 + 15% )^-4 = $14.86

Fifth year dividend = $31 x ( 1 + 15% )^-5 = $15.41

As we know Sum of present values of all the future dividends is the value of the share,

Value of Share = $9.57 + $12.10 + $13.81 + $14.86 + $15.41 = $65.75

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AURORKA [14]

Answer: This is an example of<em><u> "paid display" </u></em>type of Internet advertising

Paid display or pay-per-click advertising, is an effortless, inexpensive way to compass the right masses.

Here, When Phil clicked on the ad, it took him to a different website where the skateboards were listed for sale. Thus targeting the right audience with right ad.

5 0
3 years ago
In the context of performance management, which term refers to a measure that obtains consistency of results over time?
kherson [118]

Test retest reliability

The  performance management,term refers to a measure that obtains consistency of results over time.

It also carries the idea of performance appraisal through which more work can be achieved by rewarding the personnel who achieve their targets on time and show their results.

It helps optimize the performance to obtain consistency over the time with providing feedback and improvement in the performance. Psychometrics tests and evaluation test are used for improvement of employee performance. Several policies and procedures are also implemented for their welfare.

To learn more about performance management here,

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5 0
1 year ago
Batman parked the Batmobile himself and kept the bat keys. There was no attendant at the lot. Two hours later, Batman left the r
kupik [55]

Answer:

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5 0
3 years ago
Which of the following formulas is used to compute the accounting rate of return?
tekilochka [14]

Answer:

Option (A) is correct.

Explanation:

Accounting rate of return is determined to take the efficient business decision related to the capital budgeting and it tell us whether to accept the proposal or not. The following is the formula:

Accounting rate of return = (Average Income ÷ Initial Investment)

For example:

Net profit for 3 years are as follows:

2012 - 13 = $50 million

2013-14 = $100 million

2014-15 = $150 million

Initial investment = $200

Average profit = ($50 + $100 + $150) ÷ 3

                        = $100

Accounting rate of return = (Average Income ÷ Initial Investment)

                                          = $100 ÷ $200

                                          = 0.5 or 50%

5 0
3 years ago
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asambeis [7]

Answer:

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6 0
2 years ago
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