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alexira [117]
3 years ago
10

Orwell Building Supplies' last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after

which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price?
Business
1 answer:
EleoNora [17]3 years ago
8 0

Answer:

Best estimate of the current stock price= $42.64

Explanation:

Price of the stock today = \frac{D1}{(1+ke)^1}+\frac{D2}{(1+ke)^2}+\frac{P2}{(1+ke)^2}.

where P2 = \frac{D3}{ke-g}

D0=$1.75

D1=$1.75(1.25)

D2=$1.75(1.25)(1.25)

D3=$1.75(1.25)(1.25)(1.06)

Price of the stock today = \frac{1.75(1.25)}{(1+0.12)^1}+\frac{1.75(1.25)(1.25)}{(1+0.12)^2}+\frac{1.75(1.25)(1.25)(1.06)}{(0.12-0.06)(1+0.12)^2}. = $42.64

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velikii [3]

In the united states, in practice, the differences among the measures of inflation computed using the cpi, the GDP deflator, and the PCE deflator are small.

In economics, inflation is a widespread boom in the fees of goods and offerings in an economy. when the general fee degree rises, each unit of currency buys fewer items and offerings; therefore, inflation corresponds to a discount inside the purchasing energy of money..

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7 0
1 year ago
One way that criminal law differs from civil law is that it: provides remedies for violations of private rights. must yield a un
lara [203]

Answer:

Criminal law "must must yield a unanimous verdict."

Explanation:

Civil law refers to a body of law protecting individual rights. It handles disagreement between people, or organizations.

Criminal law deals with crimes commited against the state or federal government by an individual who breaks a criminal law.

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2 years ago
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Answer:

C. By realizing gains through increase in share price and cash divideneds.

Explanation:

For most corporations, the management must strive to ensure the firm is doing well in the market space. Once a company is doing well, it will affect its share price positively on the stock exchange.

An increase in the share price of fim is a gain to the firm and its corporate owners. I.e sharedholders. This means that the value of their investment in the firm has appreciated.

Furthermore, the firm must try to make profit which is one of the reason of being in business. A firm that is making profit will be able to declare same at the end of the financial period, hence corporate holders(shareholders) would be have part in profit declaration through dividened.

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2 years ago
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Explanation:

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Norma-Jean [14]

Answer:

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The cost added during October will be part of October calculation, on September we should work with September values.

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