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Vinvika [58]
3 years ago
6

Gruber Corp. pays a $9 dividend on its stock. The company will maintain this dividend for the next 3 years. In year 4, the divid

end will increase to $10 and then grow at a constant 5 percent rate annually into perpetuity. If the required return on this stock is 10 percent, what is the current share price?
Business
1 answer:
stealth61 [152]3 years ago
3 0

Answer:

Share price Today = $172.574

Explanation:

Using dividend growth model we can compute price of share after 3 years,

As follows:

P_3 = \frac{D_4}{K_e - g}

Where P3 = Price at end of year 3

D4 = Dividend at end of year 4 = $10

Ke = Cost of return = 10%

g = growth rate = 5%

P3 = \frac{10}{0.10-0.05} = $200

Now, we have

Year    Dividend or price        Present value factor          Present Value

1                     $9                                0.909                                $8.181

2                    $9                                0.826                                $7.434

3                    $9                                0.751                                  $6.759  

3                    $200                           0.751                                  $150.20

Net Present value of share today = $172.574

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Answer:

2014 CPI= 101.5

2013 CPI= 100.8333333

2014 Inflation Rate= 0.66%

Explanation:

Consumer Price Index (CPI):

The index is calculated by taking the price of the basket in one year and dividing it by the price of the basket in another year. This ratio is then multiplied by 100.

Basket Price:

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3 years ago
A Whopper combo meal costs $3.00 and gives you an additional 15 units of utility; a meal at the Embassy Suites costs $29.00 and
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Answer:

be indifferent between the two meals

Explanation:

Marginal utility is the additional satisfaction received from consuming an additional unit of a good or service. Marginal utility is the additional utility derived from consuming one more unit of a good. the consumption decision is to consume more units of a good that gives the higher utility per good.

Marginal utility per good = marginal utility / price of the good

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both meals have the same marginal utility of 5. She would be indifferent between consuming the two meals

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Answer:

Diverisify

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The best option would be to diverisify between various things. Part into a promising crypto such as Ethereum or Bitcoin. Part into some basic index funds such as the SPY (S&P500), some bigger tech companies such as Apple and finally a more risky investment into a stock or crypto which is only in the beginning of its age. If you would like protection against a crisis or similar you could buy some Put options for your stocks.    

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Answer: A

Explanation:

A complementary good is a product that is used together with another product. Without its complement, such a good will have little value. When there is increase in the price of a particular product, the demand of its complement reduces because consumers may not be able to use the complement on its own.

Complements have negative cross elasticity of demand i.e there is increase in the demand for a product when the price of its complement reduces. If bicycles and gasoline are complements, an increase in tax on gasoline will have a negative effect on the demand for bicycle. Due to the price increase of gasoline, less people will demand for bicycle. The initial change that will occur as a result of this is that as there is a price increase for gasoline, there will be a leftward shift in the demand for bicycle. This implies that less bicycle will be demanded for.

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