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
aev [14]
2 years ago
7

Gruber Corp. pays a constant $8.45 dividend on its stock. The company will maintain this dividend for the next 15 years and will

then cease paying dividends forever. The required return on this stock is 13 percent. What is the current share price?
Business
1 answer:
nata0808 [166]2 years ago
5 0

Answer:

The price of the stock today is $54.61

Explanation:

The stock of this company pays a constant dividend for a defined period of time after equal intervals. Thus, it is just like an annuity. To calculate the price of such a stock, we will use the present value of annuity formula:

Assuming that the dividend is paid at the end of the period.

Present Value of Annuity = Dividend * [(1 - (1+r)^-n) / r]

Where,

  • r is the required rate of return
  • n is the number of years of annuity

The price of the stock today is,

P0 = 8.45 * [(1 - (1+0.13)^-15) / 0.13]

P0 = $54.607 rounded off to $54.61

You might be interested in
d)The owner of a cemetery plans to offer a perpetual care service for grave sites. The owner estimates that it will cost $150 pe
Nana76 [90]

Answer:

The one time fee that the owner should charge is $1764.71

Explanation:

To calculate the one time fee, we take this as a perpetuity and calculate the value or price of the perpetuity based on the fututre cash flows discounted to today's price by a certain dicount rate.

The discount rate is taken as 8.5% which is also the market interests rate.

The formula for the value/price of the perpetuity is,

Value / Price = Cash flow / Discount rate

Value / Price = 150 / 0.085

Value / Price = $1764.705 rounded off to $1764.71

4 0
3 years ago
Starbucks repurchased over $1.4 billion of its common stock in 2015. how did this repurchase affect starbucks' roe
Zolol [24]
Starbucks repurchased over $1.4 billion of its common stock in 2015. How did this repurchase affect Starbucks' ROE?

4 0
3 years ago
Company purchased $60,000 of Stanton Company’s 12% bonds at 100 plus accrued interest of $2,400. On June 30, Pierce received its
ASHA 777 [7]

Answer:

d. $51,500

Explanation:

Proceed from sale of the bonds

face value x quote

50,000 x 103/100 = 51,500

The company will recognize a gain from the sale of 1,500 dollars as it sold  the investment for 51,500 while it was valued at 50,000 in their books

5 0
2 years ago
Which adjective best describes you at work? a.unique b.orderly
UkoKoshka [18]

Answer:

B

Explanation:

being unique can be good at work but making sure you're organized doing your job is vital.

5 0
2 years ago
In a(n) ________, members eliminate internal trade barriers, adopt a common external policy toward nonmembers, and eliminate bar
Elanso [62]

Option B, In a(n) , common market members eliminate internal trade barriers, adopt a common external policy toward nonmembers, and eliminate barriers to the movement of the factors of production.

A legal agreement that creates a collection of nations that adopt a single external policy  tariff is known as a common market. Countries that participate in a single market also permit free commerce as well as the free movement of capital and labor within the group's members. It establishes a common external tax on imports in the market. Members of this market thus do away with trade restrictions and embrace or adhere to a common policy.

learn more about common market here:

brainly.com/question/3317960

#SPJ4

6 0
10 months ago
Other questions:
  • One policy response to the u.s. economic slowdown of 2001 was tax cuts. this policy response can be represented in the is–lm mod
    8·1 answer
  • An automobile dealer expects to sell 900 cars a year. The cars cost $9000 plus a fixed charge of $1000 per delivery. If it costs
    5·1 answer
  • Because services like cruises and car rentals are perishable, many marketers use
    13·1 answer
  • Mercury Company sells tickets in advance for its weekly productions and records the proceeds as Unearned Revenue. At the end of
    12·1 answer
  • Once values and ethical standards have been formally adopted, a company must …….. A. require every employee to memorize the comp
    8·1 answer
  • Match the items with their respective descriptions.
    10·1 answer
  • A company rents a building with a total of 100,000 square feet, which are evenly divided between two floors. The space on the fi
    13·1 answer
  • Please identify what type of error the following sentence includes: While searching for employment, I travelled to Shanghai, Chi
    5·1 answer
  • Rooney Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside R
    7·1 answer
  • Kali wants to start her own investment firm from scratch, so she's very focused on understanding the possible drawbacks of takin
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!