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Mama L [17]
3 years ago
15

Last week, Railway Tours paid its annual dividend of $1.20 per share. The company has been reducing the dividends by 10 percent

each year. What is the value of this stock at a discount rate of 13 percent
Business
1 answer:
Brrunno [24]3 years ago
8 0

Answer: $4.70

Explanation:

The Gordon Growth Model allows for the calculation of stock value using the predicted growth rate of dividends and the discount rate.

The formula is;

Value of stock = Next Dividend / ( Discount rate - growth rate)

Next Dividend = Current dividend * growth rate

= 1.2 * ( 1 - 0.1)

= $1.08

Value of Stock = 1.08 / ( 13% - (-10%))

= 1.08 / ( 13% + 10%)

= 1.08 / 23%

= $4.70

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Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an ann
Bas_tet [7]

Answer:

25%

Explanation:

Accounting rate of return =( Net income from investment ÷ Cost of investment ) × 100

Net income from investment = $100,000

Cost of investment = $400,000

Required rate of return = ($100,000 / $400,000 ) × 100

= 0.25 × 100

= 25%

7 0
3 years ago
A monopoly market is characterized by the inverse demand curve P = 1,200 – 40 Q and a constant marginal cost of $200. If the mar
Sergeeva-Olga [200]

Answer:

The profit maximizing output level declines by 2.5 units and the price rises by $100.

Explanation:

In a monopoly market the inverse demand curve is given as,

P = 1,200 - 40Q

The marginal cost of production of the last unit is $200.

The total revenue is

= Price\times Quantity

= 1,200Q - 40Q^{2}

The marginal revenue of the last unit is

= \frac{d}{dx} TR

= 1,200 - 80Q

At equilibrium the marginal revenue is equal to marginal price,

MR = MC

1,200 - 80Q = 200

80Q = 1,000

Q = 12.5

Putting the value of Q in the inverse demand function,

P = 1,200 - 40\times 12.5

P = $700

Now, if the marginal cost rises to $400,

At equilibrium the marginal revenue is equal to marginal price,

MR = MC

1,200 - 80Q = 400

80Q = 800

Q = 10

Putting the value of Q in the inverse demand function,

P = 1,200 - 40\times 10

P = $800

4 0
3 years ago
Your company is producing a phone with a new video feature. You need to review design specifications with the production company
Nana76 [90]

Answer: Because it is a private issue that concers only to the company and has to be handled with care, besides, other companies don't have to know about the specifications review.

Explanation: According to Ricks and Gow, “The primary purposes of business letters are to inform, instruct, request, inquire, remit, order, advice, correct and to question.” The basic purpose of any business letter is to <u>convey information</u> regarding business activities.

3 0
3 years ago
Read 2 more answers
Which of the following are risks that Banks must prepare for select 3 answers <br><br>​
n200080 [17]

Answer:

I think one is borrowers who don't pay back

Then I think that interest rates falling is also one

These are the only ones I can think of. hope they help

7 0
3 years ago
Alex's country was once communist, but now allows limited private ownership of companies, and lets market forces determine produ
ioda

Alex's country was once communist, but now allows limited private ownership of companies, and lets market forces determine production and pricing decision is the kind of 'Market Socialist' economy.

Market socialism, sometimes known as liberal socialism, is an economic system that strikes a balance between free enterprise and socialist planning. In this system, businesses are publicly owned, but output and consumption are determined by the market rather than by governmental planning.

In real life, Market socialism components have been present in a number of different economies. A version of market-based socialism, based on socially owned cooperatives, workers' self-management, and market allocation of capital, is usually regarded as having existed in the former Socialist Federal Republic of Yugoslavia.

To learn more about Communist

brainly.com/question/14018486

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1 year ago
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