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Marizza181 [45]
3 years ago
7

is expected to pay a dividend of $2.60 and $2.24 over the next two years, respectively. After that, the company is expected to i

ncrease its annual dividend at 2.8 percent. What is the stock price today if the required return is 10.2 percent?
Business
2 answers:
Natalka [10]3 years ago
7 0

Answer: The stock prices for today are $35.14 and $30.27

Explanation:

Stock Price(P) = D1/{r-g}

D1 = $2.6

D2 = $2.24

r = 10.2%

g = 2.8%

P1 = 2.6/(0.102 - 0.028)

P1 = 2.6/0.074

P1 = $35.14

P2 = 2.24/(0.102 - 0.028)

P2 = 2.24/0.074

P2 = $30.27

Romashka-Z-Leto [24]3 years ago
5 0

Answer:

$29.13

Explanation:

first we need to calculate the growing perpetuity value for year 2:

= dividend / (discount rte - growth rate) = $2.24 / (10.2% - 2.8%) = $2.24 / 7.4% = $30.27

Now we have to calculate the present value of the dividends for the next two years and the growing perpetuity:

present value = ($2.60 / 1.102) + ($2.24 / 1.102²) + ($30.27 / 1.102²) = $2.36 + $1.84 + $24.93 = $29.13

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Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases
Murljashka [212]

Answer:

The difference is $612

Explanation:

By using the Periodic inventory system Fulbright Corp. calculates its Cost of Sales and Inventory at the end of a certain period. In this case at year end.

FIFO

FIFO assumes that the units to arrive first will be sold first. Meaning inventory will be valued using recent prices.

FIFO inventory = 36 units x $122 = $4,392

LIFO

LIFO assumes that the units to arrive last will be sold first. Meaning that the inventory will be valued using earliest (old) prices.

LIFO inventory = 36 units x $139 = $5,004

Conclusion

Difference = LIFO inventory - FIFO inventory

                  = $5,004 - $4,392

                  = $612

3 0
3 years ago
A driver should not strive to develop a positive attitude when driving
Fudgin [204]
If this is a true or false question then I would say that it is false
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About this app<br> What is the benefit of this app
Andrej [43]

Answer:

its fun to answer other people's questions when you know the answer and when you don't you can use Google and still get points for it. that's always fun is feeling smart. or you get help from others on questions you can either type up your question or take a picture of it!! there's many benefits.

Explanation:

unlike other apps like Socratic it only knows some answers in math class and history, but here there's smart people out there that are able to answer almost any questions for you, there's always someone in the world that knows on here!

7 0
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The exit of existing firms from a competitive market will a. decrease market supply and increase market price. b. decrease marke
makvit [3.9K]

Answer:

The correct answer is option A.

Explanation:

The exit of existing firms from the market will reduce the overall market supply. This will cause the market supply curve to move to the left.

This leftward shift in the market supply curve will lead to an increase in the equilibrium price. The equilibrium quantity will be reduced.

The other firms in the market will get more market share and higher profits.

4 0
2 years ago
A University of Iowa basketball standout is offered a choice of contracts by the New York Liberty.
Ratling [72]

Answer: <em>The lowest interest rate at which the present value of the second contract exceeds that of the first is </em><em>a. 7 percent</em><em>.</em>

Explanation:

<em>Calculating present values is a useful way to compare cases where money is to be received in the future. The higher the present value (when comparing cases where you get money), the better</em>. To calculate it, we make use of the next formula:

PV=\frac{C}{(1+r)^{n}}

Where PV: Present value,

C: Cash flow at a given period,

r: Interest rate, and

n: Number of periods that will have passed (in this case, we are talking about years).

Now, since we are getting money twice in each case (the first payment one year from today, and the final payment two years from today), we can restructure our present value formula to include these two payments. We will get something like this:

PV=\frac{C_1}{1+r}+\frac{C_2}{(1+r)^{2}}

<em>Notice how each fraction represents one of the payments received, with one having an 'n' of 1 year, and the other one having an 'n' of 2 years. C₁ and C₂ represent the first and the second payment, respectively.</em>

<em />

Now that we have our completed formula, let's review each contract's present value (PV) with the lowest interest rate (7%), just to see how it turns out. <em>Remember that 7% equals 0.07 in any formula</em>:

<em>Contract A) This one gives her $100,000 one year from today and $100,000 two years from today</em><em>.</em>

PV_{A,0.07}=\frac{100000}{1+0.07}+\frac{100000}{(1+0.07)^{2}}\\PV_{A,0.07}=93457.944+87343.873\\PV_{A,0.07}=180801.817dollars

So Contract A's present value at 7% interest rate would be equal to <em>$180801.817</em>.

<em>Contract B) The second one gives her $132,000 one year from today and $66,000 two years from today</em><em>.</em>

PV_{B,0.07}=\frac{132000}{1+0.07}+\frac{66000}{(1+0.07)^{2}}\\PV_{B,0.07}=123364.486+57646.956\\PV_{B,0.07}=181011.442dollars

So Contract B's present value at 7% interest rate would be equal to <em>$181011.442, </em><em><u>which exceeds that of Contract A</u></em><em>.</em>

<em>Since among our options of interest rates, 7 percent is the lowest one, and, with this taken into account, the present value of the second contract (Contract B) exceeded that of the first (Contract A), </em><em>the answer is a. 7 percent</em><em>.</em>

8 0
3 years ago
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