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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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Answer:

a. $720,000

Explanation:

Since in the question, it is given that the equipment is sold at the list price

The list price is $800,000 and the selling percentage is 90%

So, the revenue should be recorded

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= $800,000 × 90%

= $720,000

Simply we multiplied the list with the selling percentage so that the correct amount can come

3 0
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Because all work ultimately entails some human interaction, effort, or involvement, Bossidy and Charan believe that focusing on
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true

Explanation:

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Which of the scenarios best reflects the meaning of the term inflation targeting? a) In anticipation of the upcoming election, t
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Answer:

b) A central bank is expected to achieve a 3% annual inflation rate

Explanation:

Inflation targeting is a type of monetary policy where the central bank of a country sets an inflation rate as its goal or target.

5 0
3 years ago
If the inflation rate decreased from 3.33% to 2.90% between October and November, while the nominal interest rate increased from
Rudiy27

Answer:

1.90%

Explanation:

There is the accordance or connection between nominal and real interest rates. It is basically possible to convert from nominal interest rates to real interest rates. According to the Fisher, there is a equation that's called the Fisher Equation:

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On our example,

Inflation rate in October- 3.33%

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Nominal interest rate in November- 4.80%

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In November,

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7 0
3 years ago
Read 2 more answers
Blake and Matthew are partners who agree that Blake will receive a $103,000 salary allowance and that any remaining income or lo
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Answer:

total net income = $109,000

Explanation:

given data

Blake receive = $103,000

Matthew capital account is credited = $3,000

solution

we know that both partner get equal part in  remaining loss or income

so here Blake get $3,000 as share of the net income

so that here net income for the period, that will Blake's salary allowance +  amount shared in both persons of net income

as that

total net income = $103,000 + $3,000 +$3,000

total net income = $109,000

7 0
2 years ago
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