1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Veronika [31]
3 years ago
11

Savickas Petroleum’s stock has a required return of 12%, and the stock sells for $43 per share. The firm just paid a dividend of

$1.00, and the dividend is expected to grow by 30% per year for the next 4 years, so D4 = $1.00(1.30)4 = $2.8561. After t = 4, the dividend is expected to grow at a constant rate of X% per year forever. What is the stock’s expected constant growth rate after t = 4, i.e., what is X?
a.
5.15%

b.
6.78%

c.
6.37%

d.
5.49%

e.
7.25%
Business
1 answer:
FrozenT [24]3 years ago
3 0

Answer:

correct option is b.  6.78%

Explanation:

given data

required return = 12%

stock sells = $43 per share

dividend = $1.00

expected to grow = 30%

D4 = $1.00 × (1.30)^4 = $2.8561

solution

we get here first present value of dividend for 4 year that is

year        cash flow                   pv(13%)           present value

1                $1.30                        0.8929             $1.16                

2                $1.69                       0.7972              $1.35        

3                $2.20                      0.7118                $1.56  

4                $2.86                      0.6355               $1.82  

so  

present value of dividend for 4 year is = $5.8868

so

price of stock will be

price of stock = present value of dividend + price at year 4

43 = 5.8868 + \frac{2.86 \times (1+x)}{0.12-x}  

solve it we get

x = 6.78%

so correct option is b.  6.78%

You might be interested in
A great way to keep followers up to date on your business is to utilize​ __________ online. A. comments and critiques B. orienta
mafiozo [28]

Answer:

c. Status Update and Announcements

Explanation:

By keeping customers up-to-date with the recent development and also making announcements in your business the customer will be carried along properly in other to create a continuous and long lasting customer relationship.

For example: Social media or mailing notifications - updates are being passed across through selected means to customers before logging in into the platforms which has lead to the increase and continuous use of both platforms effectively.

7 0
3 years ago
As interest rates rise, _____.
brilliants [131]

B.it becomes more expensive to hold money as cash is the correct answer

7 0
3 years ago
Read 2 more answers
Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a
MArishka [77]

Answer:

1. The Bad debt expense for 2013 is $67,500

2. The amount of accounts receivable written off during 2013 is $69,500

3. If the company uses the direct write-off method, the bad debt expense for 2013 would be $69,500

Explanation:

1.  In order toCalculate the bad debt expense for 2013 we would have to make the following calculation:

Bad debt expense=1.5% of Net Credit Sales

=1.5%×$4,500,000

=$67,500

The Bad debt expense for 2013 is $67,500

2. In order to Determine the amount of accounts receivable written off during 2013 we would have to make the following calculation:

amount of accounts receivable written off=$42,000+$67,500-$40,000

amount of accounts receivable written off=$69,500

The amount of accounts receivable written off during 2013 is $69,500

3. Using direct write off method, the bad debt expense is recognized only when the actual bad debt is incurred. The actual bad expense would be the amount of accounts receivable written off during the year. Accounts receivable written off during the year would be same in both the methods.

Thus, the bad debt expense for the year 2013 would be $69,500.

4 0
3 years ago
A channel of distribution is defined as a group of individuals and organizations thata) consumes about one-half of every dollar
motikmotik

A channel of distribution is defined as a group of individuals and organizations that b) directs the flow of products from producers to customers.

A channel of distribution is the channel where products move from each stage all the way down into the consumers hands. Different company's and their products may have differences in their distribution path but, they allow follow a path of some sort.

5 0
3 years ago
Is there a potential problem if governments continually finance goods and services by borrowing money ? A.Yes, it is unconstitut
frosja888 [35]
The answer is B,"Yes, eventually their debts must be repaid with interest.

4 0
3 years ago
Read 2 more answers
Other questions:
  • The Maurer Company has a long-term debt ratio of .50 and a current ratio of 1.40. Current liabilities are $970, sales are $5,190
    15·1 answer
  • Megatronics, Inc., obtains computer components from a variety of suppliers and puts them together according to customer specific
    12·1 answer
  • Owen Cartwright has joined a real estate syndicate that bought an office building in downtown Orlando, Florida. What type of inv
    10·2 answers
  • Inefficient capitalism socialism or communism
    10·1 answer
  • The lazy-boy furniture company collects information about a wide variety of competitive, economic, political, legal and regulato
    11·1 answer
  • On june 15, 2018, sanderson construction entered into a long-term construction contract to build a baseball stadium in washingto
    11·1 answer
  • Calculate the marginal cost of the 70th toy car produced. Round your answer to the nearest hundredth.
    14·1 answer
  • The following items are components of a traditional Balance Sheet. How much are the total assets of the firm?
    13·1 answer
  • You live in Atlanta, GA and work for a company which has multiple locations nationwide. The owner of the company tells you on a
    9·1 answer
  • What's Target's code of ethics?<br><br><br><br><br> don't give links as answers, thankyou
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!