Answer:
$32.20
Explanation:
The computation of the value of the stock is shown below:
Dividend per share = $3
The Required rate of return = 15%
Return on equity = 13%
Dividend payout ratio = 60%
Based on the above information,
First we have to determine the growth rate which is
Growth rate = (1 - Div Payout ratio) × ROE
= (1 - 60%) × 13%
= 5.20%
Now the value of the stock is determined by using the Gordon model
= Last year dividend × (1 + growth rate) ÷ (Required rate of return - growth rate)
= $3 × (1 + 5.20%) ÷ (15% - 5.20%)
= $32.20
Answer:
= $19.57
Explanation:
Price of the stock (P0) = Div1 / (r-g)
Div1 = next year's dividend = $2.25
r = required return = 12.25% or 0.1225 as a decimal
g = growth rate = 0.75% or 0.0075 as a decimal
Next, plug in the numbers to the formula;
Price (P0) = 2.25/ (0.1225 -0.0075)
Price (P0) = 2.25 / 0.115
= $19.57
Answer:
a. The socially efficient levels of abatement for UNC power plant is 10.
Explanation:
Note: See the attached Microsoft word file for the calculations of the anwers above.
Answer: price-discriminating firms charge more price from the group that has less price elasticity of demand than the group that has more elastic demand
Explanation:
Means, the group that does not decrease their demand as the price goes up. Price discriminating firms charge more price from such groups. Let me explain more that what price discriminating firms are.
These are the firms that charge different prices for similar and identical good from different groups.
