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Airida [17]
3 years ago
7

Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $11.90, but management expects to reduce the p

ayout by 5 percent per year indefinitely. If you require a return of 12 percent on this stock, what will you pay for a share today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
GrogVix [38]3 years ago
6 0

Answer:

The price of the stock is $66.5

Explanation:

The constant growth model of the DDM approach will be used to calculate the price of such a stock today.

The formula for the constant growth model is,

P0 or V = D0*(1+g) / r - g

As the growth rate in the company's dividedn is negative, the growth rate will be -5%.

The price of the stock is,

P0 = 11.9 * ( 1 - 0.05) / 0.12 + 0.05

P0 = $66.5

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Answer:

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Using this formula

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Let plug in the formula

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Therefore Elk's taxable income is:$80,000

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Answer:

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4 0
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The entire demand for products and services at any given price level throughout a specific period is referred to as aggregate demand in macroeconomics. Since the two indicators are derived in the same way, aggregate demand over the long run equals gross domestic product (GDP). A country's gross domestic product (GDP) reflects all the products and services that are produced there, whereas aggregate demand refers to consumer demand for the same goods.

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