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zaharov [31]
3 years ago
8

Q4) Lohn Corporation is expected to pay the following dividends over the next four years: $13, $9, $6, and $2.75. Afterward, the

company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock 10.75 percent, what is the current share price
Business
1 answer:
Kitty [74]3 years ago
5 0

Answer:

$58.70

Explanation:

The computation of the current share price is shown below:

But before that we need to find out the value after year 4 which is shown below:

Value after year 4 is

= (D4 × Growth rate) ÷ (Required return - Growth rate)

= (2.75 × 1.05) ÷ (0.1075 - 0.05)

= $50.2173913

Now current share price is

= Future dividends × Present value of discounting factor(10.75%,time period)

= $13 ÷ 1.1075 + $9 ÷ 1.1075^2 + $6 ÷ 1.1075^3 + $2.75 ÷ 1.1075^4 + $50.2173913 ÷ 1.1075^4

= $58.70

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Answer:<u><em>Option (b) is correct.</em></u>

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g A method used to determine the value of a stock by analyzing the earnings prospects while considering the business environment
Gennadij [26K]

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Operational analysis can be likened to performance measurement where the performance of a business is measured viz-a-viz the expected performance with to aligning actual performance with plan

Fundamental analysis is the correct option as it encompasses determining the value of stock by conducting both internal and external analysis of a business concern.

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****30 POINTS*******If you were about to launch a new business, would you write your business plan from scratch or use a softwar
Sav [38]

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It expands the regulatory authority for the Fed over non-depositary financial institutions, such as hedge funds and mortgage brokers, which had previously operated under little regulatory supervision or accountability. The Dodd-Frank Act of 2010 adopted by the Congress has also been in place. They were established to identify emerging risks within the financial sector in order to reinforce risky practices prior to the crisis.

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