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Andrews [41]
3 years ago
10

Steve's Cider Shack, Inc. just paid a dividend of $8 per share of common stock. The dollar amount of the dividends is expected t

o grow at a constant 2% per year definitively into the future. The required rate of return from shares of common stock from similar businesses in the current economic climate is 13%
What would you expect the current market price of a share of Steve's Cider Shack common stock to be?

Assuming the cash dividend amount and the growth rate are accurate, what is the annual rate of return on your investment in Steve's stock if you purchased shares for $63 per share?
Business
1 answer:
mamaluj [8]3 years ago
8 0

Answer:

Check the following calculation

Explanation:

Current price : D0(1+g)/(Rs-g)

                  8 (1+.02)/(.13-.02)

                  8* 1.02 / .11

                   = $ 74.18 per share

2) Dividend: 8(1+.02) = 8.16

Annual rate of return : [P1- P0+D ]/P0

             [74.18 - 63 + 8.16 ]/63

                19.34/63

                  .3070 or 30.70%

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3 years ago
Based on the principles of psychological pricing, which of the following price adjustment would likely have the greatest positiv
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D.) $50 to $49

Explanation:

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3 years ago
You plan to invest some money in a bank account. Which of the following banks provides you with the highest effective rate of in
Lubov Fominskaja [6]

Answer:

Option (d) , Bank 4 offers the highest amount after a year

Explanation:

The total amount from each of the interest rates can be expressed as;

A=P(1+r/n)^nt

where;

A=Future value of investment

P=Initial value of investment

r=Annual interest rate

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t=number of years of the investment

a). Bank 1

P=x

r=6.1%=6.1/100=0.061

n=1

t=assume number of years=1

replacing;

A=x(1+0.061/1)^(1×1)

A=x(1.061)

A=1.061 x

b). Bank 2

P=x

r=6%=6/100=0.06

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t=1

Replacing;

A=x(1+0.06/12)^(12×1)

A=x(1.005)^12

A=1.0617 x

c). Bank 3

P=x

r=6%=6/100=0.06

n=1

t=1

Replacing;

A=x(1+0.06/1)^(1)

A=1.0600 x

d). Bank 4

P=x

r=6%=6/100=0.06

n=4

t=1

A=x(1+0.06/4)^(4×1)

A=x(1+0.015)^4

A=x(1.061)

A=1.0614 x

e). Bank 5

P=x

r=6%=6/100=0.06

n=365

t=1

A=x(1+0.06/365)^(365×1)

A=1.0618

Option (d) , Bank 4 offers the highest amount after a year

7 0
3 years ago
Krete is an unmarried taxpayer with income exclusively from wages. By December 31, year 1, Krete's employer has withheld $16,000
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Answer:

The answer is: $0

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4 0
3 years ago
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