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erastova [34]
3 years ago
7

1. Stock Values. Integrated Potato Chips paid a $2 per share dividend yesterday. You expect the dividend to grow steadily at a r

ate of 4 percent per year. a. What is the expected dividend in each of the next 3 years? b. If the discount rate for the stock is 12 percent, at what price will the stock sell? c. What is the expected stock price 3 years from now? d. If you buy the stock and plan to hold it for 3 years, what payments will you receive? What is the present value of those payments? Compare your answer to (b). The Club Auto Parts Company has just recently been organized. It is expected to experience no growth for the next 2 years as it identifies its market and acquires its inventory. However, Club will grow at an annual rate of 5% in the third and fourth years and, beginning with the fifth year, should attain a 10% growth rate which it will sustain thereafter. The last dividend paid was $0.50 per share. Club has a cost of capital of 12%. What should be the present price per share of Club common stock?
Business
1 answer:
Blizzard [7]3 years ago
5 0
Hmmmmmmmmm I have no idea this is a tough question
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Assume that the average firm in your company's industry is expected to grow at a constant rate of 5% and that its dividend yield
Galina-37 [17]

Answer:

required return on the company's stock = 11%

Value of each share =$88.51

Explanation:

The constant growth model states that P_0=\frac{D_1}{k_e-g}. If ke is made subject of formular, k_e=\frac{D_1}{P_0}+g.

This implies that ke= dividend yield plus growth rate = 6%+5%=11%. Therefore the required return on the company's stock = 11%

Values of each share = \frac{D1}{(1+ke)^1}+\frac{D2}{(1+ke)^2}+\frac{D3}{(1+ke)^3}+\frac{P3}{(1+ke)^3}.

where D_1= D_0*(1+g)=3(1.5)

and P3= \frac{D4}{ke-g}

Value of each share = \frac{3(1.5)}{(1+0.11)^1}+\frac{3(1.5)(1.25)}{(1+0.11)^2}+\frac{3(1.5)(1.25)(1.05)}{(1+0.11)^3}+\frac{3(1.5)(1.25)(1.05)^2}{(0.11-0.05)(1+0.11)^3} = 88.51

8 0
3 years ago
An advantage of using "negotiated" transfer prices is: A. Both the selling and buying units have complete information about cost
madreJ [45]

Answer:

The correct option is A,both the selling and buying units have complete information about costs.

Explanation:

A negotiated transfer price is a price agreed between the selling and buying divisions having considered factors such the external purchase price,the opportunity costs of selling internally and externally ,whether or not there is surplus capacity and may more.

Negotiated transfer price is fairer to both divisions as opposed to a transfer price imposed by management which could result in  low morale in the buying or selling division depending on whether the price was set too high or too low.

7 0
3 years ago
When negative externalities are present in a market
Nikitich [7]

Answer:c

Explanation:

5 0
4 years ago
When a firm pursues a(n) ___________, it sells the same products or services in both domestic and foreign markets.
vladimir1956 [14]

When a firm pursues a(n)  localization strategy, it sells the same products or services in both domestic and foreign markets.

Multinationals choose from four basic international strategies: (1) international, (2) multinational, (3) global, and (4) transnational. These strategies differ between the two strains. 1) Focus on low cost and efficiency, and 2) Respond to local culture and needs.

A company can obtain its three main benefits by successfully deploying a foreign markets strategy: (1) increased market size, (2) economies of scale and learning, and (3) location advantages. I can. Greater market size is achieved by expanding beyond the company's home country.

Multinational Corporation chooses from their three basic international strategies: (1) multidomestic, (2) Global, and (3) Transnational. These strategies differ in their focus on achieving global efficiencies and addressing local needs.

Learn more about foreign markets at

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4 0
1 year ago
Even though there is no one ideal will, today, which type of will is considered best by many attorneys?
joja [24]
I would say Exemption Trust Will
3 0
3 years ago
Read 2 more answers
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