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Lelu [443]
2 years ago
15

The Francis Company is expected to pay a dividend of D1 = $1.25 per share at the end of the year, and that dividend is expected

to grow at a constant rate of 6.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company's current stock price? $28.90 $29.62 $30.36 $31.12 $31.90
Business
1 answer:
IceJOKER [234]2 years ago
3 0

Answer:

current stock price = $28.90

so correct option is (a) $28.90

Explanation:

given data

dividend of D1 = $1.25

constant rate = 6.00%

beta = 1.15

market risk premium = 5.50%

risk-free rate = 4.00%

solution

first we get here Expected rate of return that is express as

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)   .................1

put here value and we get

Expected rate of return = 4% + 1.15 × 5.50%

Expected rate of return = 4% + 6.325%

Expected rate of return = 10.325%

so now we get current stock price

current stock price = Next year dividend ÷ (Required rate of return - growth rate)   .................2

put here value and we get

current stock price = $1.25 ÷ (10.325% - 6%)

current stock price = $1.25 ÷ 4.325%

current stock price = $28.90

so correct option is (a) $28.90

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astra-53 [7]

Answer:

$275,400

Explanation:

Accumulated depreciation is the amount of depreciation which is accumulated against each years depreciation and carried until the disposal of the asset. This account will be closed on the disposal of the asset with cost of the asset.

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Which of the following is NOT a role the Human Resources department plays when helping orient employees?
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HR would orient employee by introducing them to their co-workers, assist them in their adjustment phase, and also help them fill paperwork.

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