Which of the following is false? a. In the long run, demand curves become more elastic b. Products with many complements hav
1 answer:
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Answer:
Ans. Current Share Price=$33.85
Explanation:
Hi, we first have to establish the dividend for the first 3 years and the dividend when the growth rate falls off to a constant rate of 8% with the formula to find the present value of a perpetuity with constant growth rate. From there, we need to bring all the above cash flows to present value and that is the price of the share. The formula is as follows.
To find D1, D2,and D3, we have to do this.
D1=Do(1+0.19)
D2=D1(1+0.19)
D3=D2(1+0.19)
Since 0.19 is the growth rate for 3 years. Everything should look like this
notice that the sign of the last part do not coincide with the formula, that is because the growth rate from the first 3 years is -8%.
Best of luck.
Answer:
a. ROI Dollar Amount $4; ROI percentage = 8%.
b.ROI Dollar Amount $15; ROI percentage = 15%.
a. We have:
Initial investment $50
Amount at year end $54
ROI Dollar Amount
ROI Percentage
b.
Initial investment $100
Amount at year end $115
ROI Dollar Amount
ROI Percentage