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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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Bezzdna [24]

Answer:

e. None of the above.

Explanation:

When the stock price follows a random walk the price today is said to be equal to the prior period price plus the expected return for the period with any remaining difference to the actual return due <u>due to new information related to the stock​"</u>. This is because any new information on stock which is unrelated to stock prices will lead to an increase/decrease in the stock price over a period of time.

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3 years ago
Fatima finds an article on march 16, 2014 titled "benefits of laptops" on the technologynow website. the article was written on
padilas [110]

In citing the source in MLA format, Fatima should place the title as the first to be read or written, followed by the author and citation in the end. So it should be, “Benefits of Laptops” by Michael Gray. Technology Now, August 2, 2013. Web. March 16, 2014.

6 0
3 years ago
Read 2 more answers
You are the manager of a project that has an operating leverage rating of 2.8 and a required return of 14 percent. Due to the cu
slava [35]

Answer:

The change should you expect in operating cash flows next year would be 19.60%

Explanation:

In order to calculate the change should you expect in operating cash flows next year given your sales forecast we would have to make the following calculation:

change should you expect in operating cash flows=operating leverage rating*percentage of decrease sales next year

change should you expect in operating cash flows=2.8*0.07

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The change should you expect in operating cash flows next year would be 19.60%

8 0
3 years ago
4 classes are required. each class must be extended as specified, include the components noted and function as indicated. greeti
Ket [755]
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5 0
3 years ago
Oldham Corporation bases its predetermined overhead rate on a variable manufacturing overhead cost of $4.00 per machine-hour and
Rzqust [24]

Answer:

$21.42

Explanation:

The computation of fixed component in the predetermined overhead rate is shown below:-

Fixed component in the predetermined overhead rate = Fixed Overhead ÷ Machine Hours

= $87,822 ÷ 4,100

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Therefore for computing the fixed component in the predetermined overhead rate we simply divide the fixed overhead by machine hours.

And all the other information i.e given is not relevant. Hence, ignored it

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3 years ago
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