1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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

You might be interested in
A popular cartoon channel on television ran a holiday feature on the best and worst high-tech gifts for children. in the feature
VashaNatasha [74]

Video news release (ignore what im typing in the parenthesis im taking up space)

4 0
3 years ago
. Costs that the manager has the power to determine or at least strongly influence are called: Question 5 options: A. Uncontroll
GalinKa [24]

Answer:

B. Controllable costs

Explanation:

There are some costs that are expended by a company during the cost of carrying out their business operations. These costs such as labor costs and marketing budgets are incurred because the company has full authority over them. They are costs that can be altered in short term based on a business decision.

In other words, controllable costs are those costs or expenses that can be influenced by those who are saddled with the responsibilities of incurring them.

5 0
3 years ago
Iona wrote her will. The following year, she wrote another will that expressly revoked the earlier will.Later, while cleaning ho
snow_lady [41]

Answer and Explanation:

In the given case, the second will would be destroyed non-intentionally by the testatrix that represent the person who writes the will. Also the second will would have be intended to revoke the first will

In addition to this, Testatrix intends the second will to be value also at the same time she dont want the first will to be probated

So the second will would be upheld because of testamentary motive.

4 0
3 years ago
"A tenant offers to sign a lease paying a rent of $1,000 per month, in advance (i.e., the rent will be paid at the beginning of
belka [17]

Answer:

$47,500

Explanation:

Since the payment is made monthly in advance for the period of 5 years, therefore the present value of annuity formula shall be used for the purpose of calculating the Present value of lease, which is given as follow:

Present value of annuity=R+R[(1-(1+i)^-n)/i]

In the given question

R=Rent per month paid in advance=$1,000

i=interest compounded monthly=10%/12=0.83%

n=number of payments involved=(12*5)-1=59

Present value of annuity=1,000+1,000[(1-(1+0.83%)^-59)/0.83%]

                                        =$47,500

3 0
3 years ago
Debbie, a popular wedding photographer, is able to photograph a wedding every Saturday of the year. She charges couples $4,000 f
rosijanka [135]

Answer:

c. $1,800

Explanation:

Economic cost calculates what is gained or lost when a particular activity is chosen over another activity.

It incorporates the opportunity cost of taking a particular activity into its calculation of cost.

The economic cost of Debbie taking the picture of her niece is :

$4000 - $2200 = $1800

I hope my answer helps you

6 0
3 years ago
Other questions:
  • On April 30, Janet, age 42, received a distribution from her qualified plan of $150,000. She had an adjusted basis in the plan o
    9·1 answer
  • Accessories not installed by the original equipment manufacturer (OEM) can be difficult to diagnose :_________
    10·1 answer
  • When a lender charges interest, it is known as:
    13·2 answers
  • The balance sheet reports revenues and selling costs for a period of time.
    5·1 answer
  • Maria Am Corporation uses a process costing system. The Baking Department is one of the processing departments in its strudel ma
    7·1 answer
  • Assume a firm's production process requires an average of 80 days to go from raw materials to finished products and another 40 d
    11·1 answer
  • Which of the following is responsible for conducting an independent
    15·1 answer
  • The marketing activity that receives the most attention from those concerned with ethical considerations is product strategy, bu
    12·1 answer
  • At the time of his death on July 9, Aiden held rights in the following real estate: Fair Market Value (on July 9) Apartment buil
    9·1 answer
  • Explain what the time period assumption means.
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!