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Svetlanka [38]
3 years ago
8

synovec co. is growing quickly. dividends are expected to grow at a rate of 30 percent for the next three years, with the growth

rate falling off to a constant 5 percent thereafter. If the required return is 11 percent, and the company just paid a dividend 2.8, what is the current share price?
Business
1 answer:
Temka [501]3 years ago
6 0

Answer:

P0 = $90.3328 rounded off to $90.33

Explanation:

The two stage growth model of DDM can be used to calculate the price of the share today. The DDM values a stock based on the present value of the expected future dividends from the stock. The price of this stock under this model can be calculated as follows,

P0 = D0 * (1+g1) / (1+r) +  D0 * (1+g1)^2 / (1+r)^2  +  D0 * (1+g1)^3 / (1+r)^3

+  [ (D0 * (1+g1)^3 * (1+g2) / (r - g2)) / (1+r)^3 ]

Where,

  • g1 is the initial growth rate which is 30%
  • g2 is the constant growth rate which is 5%
  • r is the required rate of return

P0 = 2.8 * (1+0.3) / (1+0.11)  +  2.8 * (1+0.3)^2 / (1+0.11)^2  +  

2.8 * (1+0.3)^3 / (1+0.11)^3  +

[ (2.8 * (1+0.3)^3 * (1+0.05) / (0.11 - 0.05)) / (1+0.11)^3 ]

P0 = $90.3328 rounded off to $90.33

P0 = $13.33

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Answer:

point-of-purchase display              

Explanation:

Point-of-purchase display: The term "point-of-purchase display" is also denoted as "POP display" is described as one of the different marketing materials or advertising that is being placed next to any merchandise that it has been promoting. However, these items are being generally located or present in any checkout area or some other location whereby that specific purchase decision is being made.

In the question above, the given type of sales promotion is referred to as a point-of-purchase display.

8 0
4 years ago
BEFORE GETTING OUT OF YOUR CAR, AFTER PARKING AT A TWO-WAY STREET CURB, YOU SHOULD:
Semenov [28]

Answer:

C. Look for cars of bicycles on the traffic side of your vehicle.

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7 0
3 years ago
Read 2 more answers
Wiley Company purchased new equipment for $60,000. Wiley paid cash for the equipment. Other costs associated with the equipment
user100 [1]

Answer:

The cost recorded for the equipment=$66,500

Explanation:

When dealing with the total cost of an equipment we take the purchase cost and other additional associated costs that come with the equipment. This can be expressed as;

T=P+A

where;

T=total cost

P=purchase cost

A=additional costs(transportation cost+sales tax+installation cost)

In our case;

T=unknown

P=$60,000

A=(1,000+3,000+2,500)=$6,500

replacing;

T=60,000+6,500=66,500

The total cost=$66,500

The cost recorded for the equipment=$66,500

4 0
3 years ago
Dole Company uses the periodic inventory system. At the end of the accounting​ period, ending inventory is​ $10,000 and beginnin
Troyanec [42]

Answer:

The one entry is recorded

Explanation:

The journal entry is shown below:

Inventory A/c Dr (Ending inventory) $10,000

Cost of goods sold A/c Dr (Balancing figure) $94,000

      To Inventory A/c Dr (Beginning inventory)        $5,000

      To Purchase account                                          $99,000

In mathematically,

Cost of goods sold = Beginning inventory + purchase - ending inventory

                                = $5,000 + $99,000 - $10,000

                                = $94,000

4 0
4 years ago
Brandon is responsible for organizing his company’s financial data. This includes a large number of data categories, some relati
Ratling [72]

Answer:

The answer is Relational Database

Explanation:

5 0
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