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PIT_PIT [208]
3 years ago
13

is preparing to pay its first dividends. It is going to pay $1.00, $2.50, and $5.00 a share over the next three years, respectiv

ely. After that, the company has stated that the annual dividend will be $1.25 per share indefinitely. What is this stock worth to you per share if you demand a 7% rate of return?
Business
2 answers:
larisa [96]3 years ago
5 0

Answer:

The answer is: share price should be $21.78.

Explanation:

The share price equals to the present value of the annual dividend stream earned from the share paid at the end of each year; discounting at the required rate of return 7%.

We have dividend stream given as follow: Y1: $1; Y2: $2.5; Y3: $5; Y4 forward: fixed at $1.25.

So share price = 1/1.07 + 2.5/1.07^2 + 5/1.07^3 + [ ( 1.25/0.07) / 1.07^3 ] = 0.94 + 2.18 + 4.08 + 14.58 = $21.78.

So, the answer is share price should be $21.78.

Svetlanka [38]3 years ago
3 0

Answer:

$21.78

Explanation:

This can be calculated as follows:

Present value (PV) of year 1 dividend = $1 × [(1 ÷ (1.07)^1] = $0.94

PV of year 2 dividend = $2.50 × [(1 ÷ (1.07)^2] = $2.18

PV of year 3 dividend = $5.00 × [(1 ÷ (1.07)^3] = $4.08

PV of $1.25 indefinite dividend = (1.25 ÷ 0.07) ÷ 1.07^3 = $14.58

The worth of the stock price per share = $0.94 + $2.18 + $4.08 + $14.58 = $21.78.

Therefore, the stock worth per share at 7% rate of return is $21.78

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8 0
2 years ago
A person with anorexia nervosa is likely to Multiple Choice
Elis [28]

Answer:

2. grow up in a perfectionistic home with very high expectations.

Explanation:

1- There is no relation with economic conditions

3- There are no relation with how home is flexible

4- If we check where problem comes from and decided that mother can be the reason then even mother has a healthy body we expect person to be normal.

2- Grow up with very perfectionist and expecting lots of issues then anorexia might occur.

7 0
3 years ago
Bundling raises higher revenues than selling the goods separately when:
Aleonysh [2.5K]

Answer:

B. there is a perfect positive correlation between the demands for two goods.

Explanation:

Bundling is a technique of combining two or more products and selling them together as one package.

This technique is most commonly used by many companies like Microsoft, McDonald's, etc.

Sometimes, the strategy of bundling doesn't pay off in some endeavours as the companies might not make profit or not make as much profit as was originally projected.

Other times, it has paid off handsomely.

À company can decide to bundle products like a mouse, a keyboard, a USB drive and a monitor to sell as one package and not sell them individually, this is known as "pure bundling".

There is an increase in revenue when the change in value of one of the product in the bundle is equally proportional to the change in value of the other product in the bundle.

6 0
4 years ago
A product that requires no new behaviors be learned by consumers is a a. continuous innovation. b. discontinuous innovation. c.
Karo-lina-s [1.5K]

Answer:

Continuous innovation

Explanation:

When products can undergo changes without the consumer learning new behaviours, it is called continuous innovation.

On the other hand discontinuous innovation is also called disruptive innovation, and involves consumers learning new skills when using the product.

An example of continuous innovation is in the television industry where revision sets have been upgraded from black and white to coloured, flat screen sets, and so on.

6 0
3 years ago
The managers of Alfredo's Pizza, a popular pizzeria in New York City, have been increasingly encouraging senior citizens to visi
finlep [7]

Answer: market development

Explanation: In simple words, market development refers to a strategy under which an organisation tries to identify and develop a new market for gaining an absolute competitive advantage.

In the given case, Alfredo 's pizza has been realizing that the population of senior citizens has been increasing. Therefore they start making products as per the needs of their new customer base.

Hence from the above we can conclude that the company is using market development strategy for their growth.

6 0
4 years ago
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