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Ulleksa [173]
3 years ago
7

You buy a share of The Ludwig Corporation stock for $21.70. You expect it to pay dividends of $1.00, $1.16, and $1.3456 in Years

1, 2, and 3, respectively, and you expect to sell it at a price of $28.15 at the end of 3 years.Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to obtain the expected total rate of return. What is this stock's expected total rate of return (assume the market is in equilibrium with the required return equal to the expected return)
Business
1 answer:
Radda [10]3 years ago
8 0

Answer:

21%

Explanation:

Given that,

Cost of share = $21.70

Expect to pay dividend in year 1 = $1.00

Expect to pay dividend in year 2 = $1.16

Expect to pay dividend in year 3 = $1.3456

Expected selling price of share at the end of year 3 = $28.15

Growth rate in Dividends:

= [(Dividend in Year 2 - Dividend in Year 1) ÷ Dividend in Year 1] × 100

= [($1.16 - $1.00) ÷ $1.00] × 100

= 0.16 × 100

= 16%

Expected dividend yield :

= (Dividend in year 1 ÷ Cost of Share ) × 100

= (1.00 ÷ $21.70) × 100

= 0.05 × 100

= 5%

Stock's expected total rate of return:

=  Expected Dividend Yield + Growth rate in Dividends

= 5% + 16%

= 21%

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matrenka [14]

Answer:

Monopolist can charge a higher price from women.

Explanation:

A monopolist is producing 100,000 units of a product.  

The price of the product is $5 per unit.  

The price elasticity of demand for men at this price is -3.5.

The price elasticity for women, on the other hand, is -0.8.

This means that the men have a relatively elastic demand for the product. While on the other hand, women have relatively inelastic demand. This implies that if the price is increased the demand from women will not change by a greater proportion.  

While demand from men can change to a greater proportion because of a change in price.  

In this situation, the firm can charge a higher price from women. This is an example of third-degree price discrimination.

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3 years ago
What personal traits are important for finance and business careers?
Levart [38]

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You must be positive

Emotional intelligence

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8 0
2 years ago
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Morgan Company issued cumulative preferred stock. What additional special feature(s) could also have been granted to preferred s
djyliett [7]

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-The right to convert the shares to common shares

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8 0
3 years ago
If a 7% increase in the price of cheese causes a 7% reduction in the total revenue received by cheese farmers, the demand for ch
Vanyuwa [196]

Answer:

C.Unit elastic

Explanation:

Unit elastic demand is the term that describes a scenario where a change in price causes a proportionate change in demand. It is one of the types of elastic demand. A good or service is said to have elastic demand if a small change in price causes a considerable change in the quantity demanded.

In the unit elastic demand, if a product price changes by a certain percentage, the demand will change by an equal percentage. In this scenario, a 7 percent price increase results in a 7 percent decrease in demand.

5 0
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The cost of goods sold for Frye Manufacturing in the year was $ 325 comma 000 . The January 1 Finished Goods Inventory balance w
zheka24 [161]

Answer:

$318,400

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Cost of Goods Sold                              $325,000

Less: Inventory Opening January 1        ( $ 31,800)

Add;Closing Inventory                               $25,200

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The cost of goods sold are found out by adding opening stock and deducting closing stock from cost of goods manufactured.

In the given scenario we had to follow reverse order to reach out at amount of cost of goods manufactured.

4 0
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