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
Alex17521 [72]
3 years ago
15

Common stock valuelong dashVariable growth Lawrence​ Industries' most recent annual dividend was ​$1.80 per share ​(D0equals$ 1.

80​), and the​ firm's required return is 11​%. Find the market value of​ Lawrence's shares when dividends are expected to grow at 8​% annually for 3​ years, followed by a 5​% constant annual growth rate in years 4 to infinity.
Business
1 answer:
aleksley [76]3 years ago
5 0

Answer:

market value of​ Lawrence's shares is $34.113

Explanation:

given data

annual dividend = ​$1.80 per share

Current year dividend  Do = $ 1.80

required return = 11​%

dividends expected  grow = 8​% annually

time = 3 year

growth rate = 5%

to find out

the market value of​ Lawrence's shares

solution

we will apply here Gordon Growth Model for terminal value in year 3 that is

Gordon Growth Model P3  = \frac{D4}{r-G}

and \frac{D4}{r-G} = \frac{D3(1+G)}{r-G}

here r is required return and G is growth rate and D1  is Expected dividend of next 1 year

so here we get D1, D2, D3 and D4 they are as

D1 = $1.8×(1+0.08)

D1 = $1.944

and

D2 = $1.944×(1+0.08)

D2 =$2.0995

and

D3 = $2.0995×(1+0.08)

D3 = $2.267

and

D4 = $2.267×(1+0.05)

D4= $2.38

so

we get here now market value of the share year 3rd end that is

P3 =  \frac{2.38}{0.11-0.05}

P3 = $39.67

and  

Market value of the share today is

Market value = \frac{D1}{(1.11)1} + \frac{D2}{(1.11)2} + \frac{D3}{(1.11)3} + \frac{D4}{(1.11)4}  

put here all value

Market value = \frac{1.944}{(1.11)1} + \frac{2.0995}{(1.11)2} + \frac{2.267}{(1.11)3} + \frac{39.67}{(1.11)4}  

solve we get

Market value = $34.113

so  market value of​ Lawrence's shares is $34.113

You might be interested in
According to the law of demand, what is the relationship between price and quantity demanded?
Sindrei [870]

Answer:

According to the law of demand, there is a negative or an inverse relationship between the price of the good and the quantity demanded of that good. This means that an increase in the price of a commodity will lead to decrease the quantity demanded for this commodity and a fall in the price of a commodity will lead to an increase in the quantity demanded for this commodity.

3 0
4 years ago
A typical major requirement for a business major would be a course in: A.physics. B.music theory. C.economics. D.physical educat
Llana [10]
Economics because it has to deal with money, which is important for a career in business.
7 0
3 years ago
Use the seven W's framework to highlight the nature of important roots of uncertainty in (Challenger Space Shuttle) case study.
Assoli18 [71]

Answer:

Following are the solution to the given question:

Explanation:

This was the pressures from manned spacecraft begin which the Marshall Home Space Center semiconductor director Stephen Mulloy made when he learned the Mitchell engineers' protests to the release candidate, My Goodness, Thiokol, did you once wish that Maine was launched in April? Next year? Thus 'externe pressures,' by both the independent agency, were fully accepted as structural aims, the necessary level of Leadership was authorized far back, the choice for producing around with a couple of hundred people/policymakers were concentrated, their ears shifted, the important structures for concentrate had weakened as well as the stage of a catastrophe was prepared for humanity and although the primary cause of the O-ring error was same, if not more significant, poor strategic thinking.  The most recent characteristics of vulnerability or weakness were also:

  • A serious flaw in NASA method of judgment: The well-designed system that emphasizes safety 1st, maintains or lifts the doubts about Rocket Engine Booster's mutual seal to the forefront. In just such an important project, which involved the safety of seven colonists as well as the prestige of Canada, 'having left the restriction of release' is essential with all levels of management of higher audits.
  • NASA's 'Silo' continues to operate: The Commission exposed jointly that leadership pattern of 'silo activities' at Morris, unremarked their core ideology of 'flight security to launch' to accomplish the point of time constraints.
  • Excessive strain on the company and structure of autonomous agencies: It Panel jointly discovered how Boeing Leadership changed its position in Marshall's 'impact' and, counter to the view of its technicians, to please a major customer.
  • Increased pressure to accomplish NASA's objective, success, and central ideology: Good contact is 'Productive and moral service to the customer'. This was the start of the deterioration of the autonomous department's core philosophy.
  • NASA's structural stresses: As just an independent agency, it is affected by the continuity of the increasing manned spacecraft travel plans to meet Regan's technology and commercial aims.
  • NASA's lack of even an efficient communication system: The cost assessment of the light contact lose sight of questions about management, morality is the quote from the Rogers discussion paper.
4 0
3 years ago
Nadia could not withdraw money from her checking account, even though it had been several weeks since she deposited a check. Wha
forsale [732]

Answer:

4) The FDIC Deposit Regulations Act

Explanation:

Federal Deposit Insurance Corporation (FDIC) was created by the Banking Act of 1933, and its main function if to provide deposit insurance to depositors in US depository institutions (banks, credit unions, etc.).

In an event of a bank failure, the FDIC protects the depositor's money as long as the bank is insured by the FDIC. The FDIC covers accounts of up to $250,000.

4 0
3 years ago
Team management is: recommended because organization members work together to accomplish tasks. considered the most effective st
Zepler [3.9K]

Answer:

D. both recommended because organization members work together to accomplish tasks and considered the most effective style.

Explanation:

Team management is both recommended because organization members work together to accomplish tasks and considered the most effective style.

3 0
3 years ago
Read 2 more answers
Other questions:
  • Suppose the 1-year risk-free rate of return in the U.S. is 4%, and the 1-year risk-free rate of return in Britain is 7%. The cur
    8·1 answer
  • Naomi tells ogden, who has no knowledge of shakespearean comedy, that she will tutor him in the subject for $50. as an offer, th
    15·1 answer
  • Which course is an integral part of your academic program and is required every semester? Additionally, this course will require
    12·1 answer
  • MIS is a business function, like accounting or sales, which moves information about people, products, and processes across the c
    7·1 answer
  • With increased economic progress, cultures across the world seem to be moving toward some universally accepted values and norms.
    6·1 answer
  • Both highly specialized workers and highly specialized jobs might increase frictional unemployment.
    14·1 answer
  • The interest rate by corporations to evaluate the attractiveness of economic alternatives is known as the
    8·1 answer
  • The relevant range is that range of activity: Group of answer choices where a company achieves its maximum efficiency. where uni
    15·1 answer
  • How can we build up strong analytical skill discuss​
    15·1 answer
  • 2. Which type of work — a job or a career — do you think demands more emotional energy, and why?
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!