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dybincka [34]
3 years ago
15

Darden Restaurants is expected to pay annual dividends of $1.90 and $2.10 over the next two years,respectively. After that, the

company expects to pay a constant dividend of $2.30 a share. What is thevalue of this stock at a required return of 16 percent?0 Hint: You will need to use general dividend discount model and the dividend discount model withno dividend growth to answer this question.‘ L ‘ $12.44. : . $14.60‘ L ‘ $13.89‘ L ‘ $13.30
Business
1 answer:
Ainat [17]3 years ago
7 0

Answer:

$13.89

Explanation:

The computation of the value of stock is shown below:

Year Dividend Present value factor at 16% Present value  

1         $1.90                0.862                               $1.64

2        $2.10                 0.743                               $1.56

3        $2.30

Price $14.375             0.743                               $10.68

The price is computed below:

= $2.30 ÷ 16% = $14.375

Total present value $13.89

The present value factor is computed below:

= 1 ÷ (1 + rate) ^ years

For Year 1 = 1 ÷ 1.16^1 = 0.862

For Year 2 = 1 ÷ 1.16^2 = 0.743

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VikaD [51]

Answer:

Juanita's trainning dilema:

B:People face trade-offs

Icestorm:

A:Markets allocate goods effectively.

Explanation:

Any hour on swimming trainning is one less for bike or running.

Also an hour runnings is one less for swimming or running

an bike hours negate the change for swimming or running.

This is the concept of opportunity cost. chose something is also chose not to do anything else.

When there is need of a certain good, batteries in this case, the market (which is the sum of all people willing to do business) will allocate resource when needed. As the demand for batteries and flashlights increased, the stores chose to purchase these instead of other to replenish the stock and make a stand to the increased demand.

8 0
4 years ago
Assume that the banking system has total reserves of $200 billion. Assume also that required reserves are 12.5 percent of checki
Annette [7]

Answer: The answer is as follows:

Explanation:

Given that,

Total reserves = $200 billion

Required reserves = 12.5 % of checking deposits

Therefore,

(a) Money multiplier = \frac{1}{Required\ Reserve}

                          = \frac{100}{12.5}

                          = 8

(b) Money supply = Money multiplier × Total reserves

                            = 8 ×  $200 billion

                            = $1,600 billion

(c) Now, if Fed increases the required reserves to 16% of deposits.

    New Money multiplier = \frac{1}{Required\ Reserve}

                          = \frac{100}{16}

                          = 6.25

    New Money supply = Money multiplier × Total reserves

                            = 6.25 ×  $200 billion

                            = $1,250 billion

    Money supply decreases to $1,250 billion.

8 0
3 years ago
After Xavier and Alyssa deposited nearly $55,000 in a savings account at Bigbux Bank, the bank failed and filed for bankruptcy.
aleksandr82 [10.1K]

Answer: should be protected due to the fact that their account is insured by FDIC.

Explanation:

From the question, we are informed that after Xavier and Alyssa deposited nearly $55,000 in a savings account at Bigbux Bank, the bank failed and filed for bankruptcy but that the Bigbux was an FDIC member bank.

Based on the above scenario, Xavier and Alyssa should be protected due to the fact that their account is insured by FDIC. Since the bank is insured, their money is safe.

4 0
3 years ago
Read 2 more answers
What's the term for a charge that either party has to pay at closing?
11111nata11111 [884]
Closing costs are fees paid at closing by either party who are buying a house.
8 0
3 years ago
Assume the corporate tax view of capital structure. Your unleveraged cost of capital is 13%. Your corporate tax rate is 30%. You
sergejj [24]

Answer:

C. 11.05%

Explanation:

The computation of the cost of capital under the proposed leveraging is shown below;

cost of capital is

=Debt÷ value of leverged firm × ((unlevered cost of capital × (1 - tax rate))

=800 ÷ 1600 × ((13% + (13%) × (1 - 30%)))

= 11.0500%

hence, the cost of capital is 11.05%

8 0
3 years ago
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