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DerKrebs [107]
3 years ago
7

Hot Wings, Inc., has an odd dividend policy. The company has just paid a dividend of $10.25 per share and has announced that it

will increase the dividend by $8.25 per share for each of the next four years, and then never pay another dividend. Required: If you require a return of 12 percent on the company’s stock, how much will you pay for a share today?
Business
1 answer:
olasank [31]3 years ago
7 0

Answer:

$56.19

Explanation:

Because Hot Wings' stock only pay dividend in next four years, the stock intrinsic value is sum of these four discounted dividends. Let formulate the calculation as below:

Hot Wings' stock intrinsic value = Dividend in year 1/(1 + Required rate of return) + Dividend in year 2/(1 + Required rate of return)^2 + Dividend in year 3/(1 + Required rate of return)^3 + Dividend in year 4/(1 + Required rate of return)^4

                                                     =  (10.25 + 8.25)/(1 + 12%) + (10.25 + 8.25)/(1 + 12%)^2 + (10.25 + 8.25)/(1 + 12%)^3 + (10.25 + 8.25)/(1 + 12%)^4 = $56.19

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3 years ago
Now- a quick question. Assume at the beginning of Year2, Becker Company has a credit (positive) balance in the AOCI account of $
castortr0y [4]

Answer:

Becker Company

The amount that Becker will report as Accumulated Other Comprehensive Income on the Year 2 balance sheet is:

= $22,800.

Explanation:

a) Data and Calculations:

Year 2 Beginning balance:

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Year 2 reported net income = $653,000

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b) Becker's Accumulated Other Comprehensive Income includes unrealized gains and losses arising from some investments, pension plans, and hedging transactions.  These are usually reported in the equity section of the balance sheet and then netted off from the retained earnings.

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2 years ago
A small craft store located in a kiosk expects to generate annual cash flows of $6,800 for the next three years. At the end of t
Dafna11 [192]

Answer:

The monetary value is $24,201.23

Explanation:

Giving the following information:

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Year 2= 6,800

Year 3= 6,800

Year 4= $15,000.

The discount rate is 15 percent.

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Year 1= 6,800/1.15= 5,913.04

Year 2= 6,800/1.15^2= 5,141.78

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6 0
2 years ago
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Serga [27]

Solution :

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-- If Fizzo does not advertise, it will earn profit of about 2 million dollar if Pop Hop advertises and 9 million dollar if Pop Hop does not advertises.

-- When Pop Hop wished to advertise , Fizzo will make a higher profit if he chooses to advertise.

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And if both the firms acts independently and they start off not advertising, then --- both firms will advertise as both of them will earn highest profits each.

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3 0
3 years ago
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Answer:

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