1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
horrorfan [7]
3 years ago
5

Shackleford corporation net income this year is $800,000. The company generally retains 35% of net income for reinvestment. the

company's common equity currently has a book value of 5,000,000. they just paid a dividend of $1.37, and the required rate of return on this stock is 12%. compute tha value fo this stock if dividends are expected to continue growing indefinitley at the comoanys interal growth rate
A. $22.61

B.$15.63

C. $11.42

D. $4.35
Business
1 answer:
ZanzabumX [31]3 years ago
4 0

Answer:

A. $22.61

Explanation:

First,

find the growth rate(g);

g = ROE *retention  rate

retention  rate = 35%

ROE = Net income/value of equity

ROE = 800,000/5,000,000 = 0.16

Therefore, g = 0.16*0.35

g =0.056 or 5.6%

Price = \frac{D0(1+g)}{(r-g)}

D0 = Recently paid dividend

g = growth rate

r = required return

Price = \frac{1.37(1.056)}{0.12-0.056} \\ \\ =\frac{1.44672}{0.064} \\ \\ =22.605

Therefore, the value of this stock is $22.61

You might be interested in
Who all go to Carroll high School in Monroe louisiana
UNO [17]

Answer:

I go to the same school!

Explanation:

Do you go there too?

I love that school.

What about you?

6 0
2 years ago
Consider a completely randomized experiment in which a control group is given a placebo for congestion relief and a treatment gr
gogolik [260]
The process should eliminate potential bias from patient psychology regarding benefits of the drug and also eliminate the potential bias from the treatment administrators. The advantage of such a procedure is that neither the patients nor the administrators of the treatments know which patients received which treatments.
6 0
3 years ago
Read 2 more answers
From 2004 to 2006 the Fed raised the federal funds rate gradually in a series of steps. The Fed's purpose was to raise the prime
zheka24 [161]
It’s c: high inflation rates would fall.
8 0
2 years ago
Give 3 sample of best practice, how airline can improve "Cost" efficiency?
valentina_108 [34]

It is called "cost efficiency" to the way in which a company, through specific commercial organization actions, manages to reduce the costs necessary to obtain a certain profit.

Thus, they seek to minimize the costs and operational losses of the company, with the aim of maximizing profits.

In this way, 3 ways in which an airline could increase its cost efficiency are:

  1. fly to places with high demand, reducing presence in not so popular destinations.
  2. reduce the time on the ground for each plane, so that it generates money almost constantly.
  3. perform optimal maintenance on each plane, to avoid breakages.

Learn more about efficiency in brainly.com/question/6672666

3 0
3 years ago
Adeline runs a multi-cuisine restaurant. On the day of a big event at the restaurant, the chefs run out of cooking gas. At this
Nonamiya [84]

Answer:

D. The GII decision style

Explanation:

This is the situation or technique whereby a leader calls his team together seeking ideas and input (brainstorming together) to find solutions to apparent problems facing them. The overall decision of the group brainstorming is what is accepted and used. This is based on the Vroom–Yetton contingency model is a situational leadership theory of industrial and organizational psychology. In the GII decision style, the final decision is no longer the leaders decision again. The leader allows free flow of discussion during the brainstorming session and doesn't impose his will. Here, Adeline calls her staff together to brainstorm a solution to the finished gas problem in front of them.

5 0
4 years ago
Other questions:
  • When Joe didn't have health insurance, he acted very cautiously, because he knew he would have to pay for any medical bills he i
    9·1 answer
  • The Fortunato Corp.'s inventory at Dec 31, 2018, was $325,000 based on a physical count priced at cost, and before any necessary
    5·1 answer
  • Alina has decided to follow her passion opening a dance studio to teach ballet lessons. She will be taking a pay cut to follow h
    5·1 answer
  • With increased economic progress, cultures across the world seem to be moving toward some universally accepted values and norms.
    6·1 answer
  • A ____ is drawn on a financial institution and is payable upon demand?
    13·2 answers
  • Explain time and space
    8·2 answers
  • Write the president (me) a memo explaining your reasoning and suggest a new pricing strategy. (You can decide what kind of busin
    13·1 answer
  • Miguel consumes only art classes and anthropology classes. Miguel prefers a bundle of art classes and anthropology classes (with
    11·1 answer
  • On july 1, shady creek resort borrowed $330,000 cash by signing a 10-year, 9% installment note requiring equal payments each jun
    9·1 answer
  • Drawing district boundaries to deliberately benefit a candidate or party is an example of:______.
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!