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Dafna11 [192]
2 years ago
11

Spacefood Products will pay a dividend of $ 2.25 $2.25 per share this year. It is expected that this dividend will grow by 3 3​%

per year each year in the future. What will be the current value of a single share of​ Spacefood's stock if the​ firm's equity cost of capital is 10 10​%?
Business
1 answer:
gavmur [86]2 years ago
7 0

Answer:

$32.14 per share

Explanation:

The computation of the current value of the single share is shown below:

= Current year dividend ÷ (Required rate of return - growth rate)

where,

Current year dividend is $2.25 per share

Required rate of return is 10%

And, the growth rate is 3%

So by placing these items, the current value is

= $2.25 ÷ (10% - 3%)

= $32.14 per share

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​Ernst's Electrical has a bond issue outstanding with ten years to maturity. These bonds have a​ $1,000 face​ value, a 5 percent
SVEN [57.7K]

Answer: 5.52%

Explanation:

Given the following :

Face value (f) = $1000

Bond price(p) = 96% of face value = 0.96 × 1000 = $960

Coupon rate = 5% Semi-annually = 0.05/2 = 0.025

Payment per period (C) = 0.025 × 1000 = $25

Period(n) = 10 years = 10 × 2 = 20

Semiannual Yield to maturity = [(((f-p)/n) + C) / (f + p)/2]

Semiannual YTM = [(((1000 - 960) / 20) + 25) / (1000 + 960)/2]

Semiannual Yield to maturity = [(((40 /20) + 25) / 1960/2]

= (2 + 25) / 980

= 27 / 980 = 0.02755 = 2.755% = 2.76%

Pretax cost of debt = Yield to maturity = 2 × Semiannual yield to maturity

Pretax cost of debt = 2 × 2.76% = 5.52%

8 0
2 years ago
WoodCore Inc. produces an entire line of office furniture at its manufacturing facility in the United States and then ships its
Lynna [10]

Answer:

WoodCore Inc. is involved in exporting.

Explanation:

Exporting is the act of producing a good in the home country, and selling the product abroad.

WoodCore Inc. is involved in exporting because, as an American company, it finishes its products in the United States, but ships a part of the production for sale in Europe.

If instead, it obtained the finished goods from Europe, and sold them in the United States, WoodCore Inc. would be involved in importing.

4 0
3 years ago
A country has invested heavily in building cars and designing electronics. Which action would it most likely take if it wanted t
nata0808 [166]

Answer:

require businesses in the country to both build cars and design electronics

6 0
3 years ago
How can you avoid saying "This year I'm going to start my business" for years?
Irina-Kira [14]

It might be wrong but I think its the first option make plans.


5 0
2 years ago
Read 2 more answers
A stock had returns of 9.62 percent, −14.65 percent, 19.85 percent, 25.35 percent, and 7.65 percent over the past five years. Wh
dybincka [34]

Answer:

The geometric average return for this stock was <u>8.64%</u>.

Explanation:

Geometric average return refers to the return which will result in the correct compounded dollars at the end of the time period.

Geometric average return can be computed using the following formula:

Geometric average return = {[(1 + r1)(1 + r2) ... (1 + rn)]^(1/n)} - 1 ......... (1)

Where r is returns from year 1 to year n.

For the stock in the question, we have:

r1 = 9.62%, 0.0962

r2 = -14.65%, or -0.1465

r3 = 19.85%, or 0.1985

r4 = 25.35%, or 0.2535

r5 = 7.65%, or 0.0765

n = 5

Substituting the values into equation (1), we have:

Geometric average return = {[(1 + 0.0962)(1 - 0.1465)(1 + 0.1985)(1 + 0.2535)(1 + 0.0765)]^(1/5)} - 1

Geometric average return = {1.51310732605096^0.20} - 1

Geometric average return = 0.0864, or 8.64%

Therefore, the geometric average return for this stock was <u>8.64%</u>.

5 0
3 years ago
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