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aev [14]
3 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]3 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

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kkurt [141]

Answer:

Presence or threat of trade barriers

Explanation:

If a company sees that a specific country has a presence or threat of trade barriers, the company will prefer to invest directly in foreign companies, instead of exporting.

This is because trade barriers, like tariffs or import quotas, will likely reduce the potential revenue that the company would get from exporting. It could reduce revenue so much as to make the company lose money.

8 0
3 years ago
Need calculation for What is the probability that the mean GPA for 64 randomly selected BYU- Idaho students will be less than 3.
Grace [21]

Answer:

Need calculation for What is the probability that the mean GPA for 64 randomly selected BYU- Idaho students will be less than 3.5?

0.016

Explanation:

1/64= 0.016

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3 years ago
The owners' equity section of a firm includes (1) $10,000 of 8%, $100 par cumulative preferred stock, and (2) $40,000 of $5 par
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3 years ago
Your parents are giving you $205 a month for 4 years while you are in college. At an interest rate of .48 percent per month, wha
luda_lava [24]

Answer:

$8,770.00

Explanation:

In this question we use the present value formula i.e shown in the attachment below:

Data provided in the question

Future value = $0

Rate of interest = 0.48%

NPER = 4 years × 12 months = 48 months

PMT = $205

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the answer would be $8,770.00

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3 years ago
During a recession, what is one way governments try to encourage growth? by increasing unemployment benefits by stopping governm
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During a recession, a number of unemployment will rapidly increased ( almost a third of citizen could be jobless). In order to handle this, government could increase unemployment benefit so the unemployed people have enough to scrapped by until the recession is over or started a new business.
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3 years ago
Read 2 more answers
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