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Alecsey [184]
3 years ago
13

The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 1

7 percent a year for the next 4 years and then decreasing the growth rate to 3 percent per year. The company just paid its annual dividend in the amount of $1.70 per share. What is the current value of one share of this stock if the required rate of return is 7.20 percent?
Business
1 answer:
Zina [86]3 years ago
8 0

Answer:

$67.66

Explanation:

The computation of current value of one share is shown below:-

Dividend 1 = $1.70 × (1 + 17%)

= $1.70 × 1.17

= $1.989

Dividend 2 = $1.989 × 1.17

= $2.32713

Dividend 3 = $2.32713 × 1.17

= $2.7227421

Dividend 4 = $2.7227421 × 1.17

= $3.18560826

Value after year 4 = (Dividend 4 × Growth rate) ÷ (Required return - Growth rate)

= ($3.18560826 × (1 + 3%)) ÷ (0.072 - 0.03)

= $3.28117651 ÷ 0.042

= $78.1232502

Current value of one share = $1.989 ÷ 1.072 + $2.32713 ÷ 1.072^2 + $2.7227421 ÷ 1.072^3 + $3.18560826 ÷ 1.072^4 + $78.1232502 ÷ 1.072^4

Where 1.072 = (1 + 7.20%)

= $1.855410448  + $2.025028194  + $2.21015204 + $2.412199524  + $59.15632166

= $67.65911186

or

= $67.66

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sashaice [31]

Answer:

0.74

Explanation:

The calculation of the stock beta is shown below:

= Stock Correlation with the market × (Standard deviation of the stock ÷ standard deviation of the market)

= 0.45 × (35% ÷ 21%)

= 0.74

Simply we divide the standard deviation of the stock by the standard deviation of the stock and then multiplied it by the stock Correlation with the market so that beta can arrive

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4 years ago
In the mid 1980s, what emerging product market did a major foreign competitor capitalized on and Kodak miss due to a poor unders
Dima020 [189]

Answer:

Kodak missed the digital camera revolution that it started.

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According to history, Kodak's Steve Sasson was the first to invent a digital camera prototype in 1975.

But, Kodak relied on its past successes to the extent that it could not see beyond its shoulders.  Kodak spotted digital technology opportunity in its business, but it lacked the foresight to sharpen its core competency so that it could redefine the market and its business from a film producing and selling company to one that gives consumers the opportunity to share images online.  It lacked the competency to understand the emerging needs of its customers and woefully failed to invest rightly in digital technology.

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5 0
2 years ago
Betty made a 20% profit on a residential lot she sold for $30,000. What did she pay for the property
Ludmilka [50]

Answer: $25000

Explanation:

From the question, we are informed that Betty made a 20% profit on a residential lot she sold for $30,000. Let the cost price of the property be represented by x.

Therefore, (100% + 20%) of x = $30000. This means that 120% of x = $30000.

120% × x = $30000

1.2x = $30000

x = $30000/1.2

x = $25000

Therefore, the amount paid for the property is $25000

3 0
3 years ago
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