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Molodets [167]
4 years ago
6

Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends.

However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from today. The dividend should grow rapidly-at a rate of 48% per year-during Years 4 and 5; but after Year 5, growth should be a constant 10% per year. If the required return on Computech is 17%, what is the value of the stock today? Do not round intermediate calculations. Round your answer to the nearest cent.
Business
1 answer:
Y_Kistochka [10]4 years ago
8 0

Answer:

The price of the stock today is $13.58

Explanation:

Using the dividend discount model approach, we can calculate the price of the stock today. DDM bases the price of a stock on the present value of the expected future dividends from the stock. The dividends and the terminal value are discounted back to the present value using the required rate of return on the stock. The price per share today for this stock will be,

P0 = 0.75 / (1+0.17)^3  +  0.75 * (1+0.48)  /  (1+0.17)^4  +  

0.75 * (1+0.48)^2  /  (1+0.17)^5  +  

[(0.75 * (1+0.48)^2 *(1+0.1) / (0.17 - 0.1)) / (1+0.17)^5 ]

P0 = $13.584 rounded off to $13.58

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LUCKY_DIMON [66]

Answer:

C. Provided goods or services to a customer.

Explanation:

Book keeping is the act of recording financial transactions of a business on a day to day basis. The purpose is to keep concise and up-to-date record of the financial transactions.

Book keeping helps in analyzing finances, assist in planning and aids better decision making.

When revenue is recorded relating to a customer's transaction, it means that the company involved has provided goods or services to a customer. The recorded transaction is a proof of services provided and evidence that the transaction passed through the company's records.

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3 years ago
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