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MakcuM [25]
2 years ago
12

Ever After Incorporated has common stock that is expected to grow at a rate of 15% over the next year. After this first year, it

will stabilize to a 2% long-term growth rate. If the dividend just paid (D0) was $2.33 and the required rate of return on the stock is 6%, what is the value of the stock today (to 2 decimals)?
Business
1 answer:
dem82 [27]2 years ago
4 0

Answer:

$66.99

Explanation:

The computation of value of the stock is shown below:-

= Dividend in year 1 ÷ (1 + required rate of return) + 1 ÷ (1 + required rate of return) × ((Dividend in year 1 × (1 + growth rate) ÷ (required rate of return - growth rate))

= ($2.33 × 1.15) ÷ 1.06 + 1 ÷ 1.06 × (($2.33 × 1.15 × 1.02) ÷ (0.06 - 0.02))

= $2.6795  ÷ 1.06 + 1 ÷ 1.06 × ($2.73309  ÷ 0.04)

= $2.527830189  + 0.943396226  × $68.32725

= $2.527830189  + 64.45966981

= $66.9875

or $66.99

Therefore for computing the value of stock we simply applied the above formula.

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A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,700 and is
jasenka [17]

Answer:

$720 and $180

Explanation:

According to the scenario, computation of the given data are as follows:

Premium for 3 years = $2,700

So, premium for 1 year = $2,700 ÷ 3 = $900 per year

Manufacturing operation percentage = 80%

Selling and administrative operation percentage = 20%

So, Premium for manufacturing operation = $900 × 80% = $720

And Premium for selling and admin operation = $900 × 20% = $180

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3 years ago
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Answer:

Detailed solution is given below:

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3 years ago
Zeta corporation just paid a $2.00 dividend. analysts believe that zeta corporation's dividend will grow by 20% next year, and t
Lelechka [254]

I guess the correct answer is $32.14

Zeta Corporation just paid a $2.00 dividend. Analysts believe that Zeta Corporation’s dividend will grow by 20% next year, and then settle into a constant growth regime at 5% per year into the future. If investors assign a required rate of return of 12% to Zeta’s stock, the stock sell for today is $32.14.

3 0
2 years ago
Celgene Corporation, a biopharmaceutical company based in New Jersey, develops cutting-edge drugs in a highly regulated environm
dezoksy [38]

Answer:

At Celgene, the environment is  <u>  dynamic  </u> because of the <u>  speed of change  </u> and because of the <u>  number of changing factors   </u> . Resources are <u>  scarce  </u> .

The managers at Celgene are facing conditions of <u>  high  </u> uncertainty. This means that it will be <u>   difficult  </u> for them to make strategic decisions about the types of products the company will offer in the future.

Explanation:

From the short passage leading to the question the following points have been used in the answers provided:

a. dynamic: the change in the areas such as informatics, functional genomics and regulations means that the operating environment is dynamic not static

b. speed of change: the statement <em>"evolve on a daily basis" </em>shows a fast pace of changing conditions

c. number of changing factors: the factors changing include informatics, functional genomics and regulations.

d. resources are scarce due to expensive researches and difficulty in acquisition of stem cells.

e. high uncertainty: due to the rapid evolution, the managers do not predict accurately, hence a high degree of uncertainty

e. increase in uncertainty makes decision making difficult.

7 0
2 years ago
A cut in tax rates effects equilibrium real GDP through two​ channels: ________ disposable income and consumer​ spending, and​ _
Paha777 [63]

Answer:

increases; increases

Explanation:

A cut in tax rate has numerous advantages and disadvantage to the economy both in long-run and short-run. A cut in tax rates increases the discretionary cash flow of people, which drives them to expand their utilisation spending. A cut in charge rates increment the size of the multiplier impact

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