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vesna_86 [32]
3 years ago
14

You are considering buying common stock in Grow On, Inc. You have projected that the next dividend the company will pay will equ

al $3.90 and that dividends will grow at a rate of 6.0% per year thereafter. If you would want an annual return of 25.0% to invest in this stock, what is the most you should pay for the stock now?
Business
1 answer:
docker41 [41]3 years ago
5 0

Answer:

$20.52

Explanation:

Given that

Estimated dividends for next period = $3.90

Required rate of return = 25%

Growth rate = 6%

The computation of Price of stock is given below:-

Price of stock = Estimated dividends for next period ÷ (Required rate of return - Growth rate)

= $3.90 ÷ (0.25 - 0.06)

= $3.90 ÷ 0.19

= $20.52

Therefore for computing the price of stock we simply applied the above formula.

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The primary purpose of any marketing communication is to get the purchaser to buy the product. b) false

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7 0
2 years ago
In November, two months before year-end, the bookkeeper erroneously recorded the receipt of a one year bank loan with a debit to
OleMash [197]

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7 0
1 year ago
A. What is a benefit of international trade to households?
devlian [24]

Answer:

a. Increased wealth due to lower prices and greater product diversity b. Ability to use productive resources found only in other countries.

Explanation:

A: Benefits of International trade for households, is an increase in wealth as a consequence of the drop in prices of goods that are imported (because these products are produced efficiently abroad), and a potential drop in prices of local goods because productive factors could potentially be more efficiently allocated increasing the productivitiy of such factors. Households also benefit because a higher diversity of products could expand their utility curve by richer consumption alternatives. B: Benefits of international trade for firms is an expansion of the disposable resources available to produce local goods, which could increase the productivity per productive factor by relatively lower prices of resources and higher quantities.

6 0
3 years ago
Suppose that the average growth rate of the economy has been 3​%. Given a forecast of 2​% growth this​ year, if rational expecta
Rudik [331]

Answer and Explanation:

Forecast error is a difference between Estimated data and real data, here Estimated data is referred to as forecast data.

According to rational expectations principles, expected forecast error's average always near to be zero.

Expected forecast error may be forecast or predict in future.

So, Expected forecast error will be zero (0%)

4 0
3 years ago
Identify the statement that is incorrect. Multiple Choice Higher financial leverage involves higher risk. Risk is higher if a co
Irina-Kira [14]

Answer:

Risk is higher if a company has more assets.

Explanation:

All of the following statements are true and correct;

1. Higher financial leverage involves higher risk.

2. Risk is higher if a company has more liabilities.

3. The debt ratio is one measure of financial risk.

4. Lower financial leverage involves lower risk.

However, it is false and an absolutely incorrect to say risk is higher if a company has more assets.

A company having more assets would have a debt ratio less than one (1) because it has many assets to fund it's business. Thus, the company would have little or no debts and as such, it's risk portfolio is very low.

Hence, risk is lower if a company has more assets.  

8 0
3 years ago
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