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
kvv77 [185]
3 years ago
6

7. The stock of Top of the Muffin currently pays a dividend of $11.40. The dividend is expected to grow by 20% per year for the

next three years. In year 4 it will increase by $6.50 over the previous year, and after that point it will grow at 3% per year for the foreseeable future. If you require a 10.7% return for investing in this stock, what is a share of the stock worth to you today
Business
1 answer:
Alina [70]3 years ago
8 0

Answer:

= $291.09

Explanation:

                                                               <em>       PV of dividend ($)</em>

Year 1      11.40 × 1.2× 1.107^(-1) =                        12.357

Year 2      11.40 × 1.2^2 × 1.107^(-2)=                 13.395

Year 3      11.40 × 1.2^3 × 1.107^(-3)=                   14.521

Year 4     ( ( 11.40 × 1.2^3) + 6.50 ) × 1.107^(-4) = 17.446

Year 5 and after

<em>This will be done in two steps:</em>

<em>Step 1</em>

PV( in year 4 terms)

=( ( 11.40 × 1.2^3) + 6.50 ) × 1.107 )/ 0.107 - 0.03

<em>=$350.456</em>

<em />

<em>Step 2</em>

PV (in year 0 term)

=350.4568312× 1,107^(-4)

= 233.369

The worth of the stock

= 12.357 + 13.395 + 14.521 + 17.446 + 233.369

= $291.09

You might be interested in
When recording the payment of interest using the effective-interest method, the entry will include a ______ to Discount on bonds
goldfiish [28.3K]

Answer:Debit , market, stated.

Explanation: An actual payment of interest from a payables account is always entered as a debit in that account ledger. Then when calculating the effective interest : it is the the difference between the cash payment based on the market interest rate and interest expense based on the stated interest rate.

6 0
3 years ago
On January 1, Year 1, Savor Corporation leased equipment to Spree Company. The lease term is 9 years. The first payment of $698,
Lelu [443]

Answer:

The interest revenue will Savor record in Year 1 on this lease at 9% is $347,697

Explanation:

Present value of Lease Payment = $4,561,300

Less: First Payment on Jan 1, 2018 = $698,000

Remaining Balance = $3,863,300

Interest Revenue for Year 1 at 9% = $3,863,300 × 9%

Interest Revenue for Year 1 at 9% = $347,697

8 0
3 years ago
Government purchases are spending by the government on​ goods, services, and factors of production. Government expenditures repr
Law Incorporation [45]

Answer: A. there has been a major increase in the amount of transfer payments the government makes through programs such as Social Security and unemployment insurance.

Explanation:

Since the 1950s, the US government budget for Transfer Payments to Social Security Programs and Unemployment benefits has increased tremendously.

The main transfer payments are Disability and Pension/ Retirement payments and they have been on the rise since the 50s.

These Transfer Payments are both a show of Humanitarianism as well as a form of Economic Investment as they help stimulate the Economy during times or Economic Distress by pouring money into it.

A typical example would be the $1,200 that Congress voted to provide direct cash payments of which totaled around $250 billion in March this year to help Americans who were hit hard by the lockdowns that have crippled much of the American economy.

6 0
3 years ago
At your next meeting with the senior management team, you suggest this, and you're met with a lot of blank looks. The managers d
Nostrana [21]

Answer and explanation:

Under such a scenario, it is important to highlight that the SWOT analysis is useful to spot the internal Strengths and Weaknesses of the firm as well as the external Opportunities and Threats of the market. The SWOT analysis is a helpful tool that allows companies to understand what their core competencies are as well as the components that need improvement. At the same time, the SWOT analysis gives the firm an idea of what are the sectors of the market that could bring potential profits for the entity and which ones represent potential losses.

7 0
3 years ago
2.Think of two investment opportunities and compare them to each other. Give a brief outline of what they are, how they work, an
Eddi Din [679]
So lets say we have two investment opportunities. A new convenient store in your neighborhood or a new shopping center more than 5 miles away from where you live... What would you invest in well lets look at the pros and cons of each investment. So even though the new convenient store is right around the corner from you and prices are low the new shopping center has better products, warranty and higher prices unlike the convenient store closer to you. So we have an investment budget of $1000 dollars and want to spend it wisely we need to access what has a better chance of being successful with what you put into it. So the convenient store will reach less people has a bargain price but also doesn't have security cameras. Even though the shopping center has great employees, top-of-the-line products, high security, and a great establishment but also has flaws. What are you gonna invest in,  will you take risks? My personal opinion is that I would invest in the shopping center because more people would be attracted to it because of the quality of service and products. So it would have a better probability in success and good use of my money. 
4 0
3 years ago
Other questions:
  • Molly is getting ready to file her tax return. She works and has a savings account. What tax forms does she need?
    15·2 answers
  • Jessica verbally agrees to sell her house to kandis, and kandis makes a $10,000 down payment, moves in, and begins the installat
    13·1 answer
  • against the foregoing background obtain any road road traffic policy and demonstrate your understanding of that particular polic
    10·1 answer
  • Please Help!!!
    8·1 answer
  • Select the correct answer from the drop-down menu. What is bias?
    6·2 answers
  • Diversification means - Options A strategy for company growth by starting up or acquiring businesses outside the company s curre
    15·1 answer
  • Rooney Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside R
    7·1 answer
  • The following standards for variable overhead have been established for a company that makes only one product:
    12·1 answer
  • Assume you decide you should invest at least part of your money in large-capitalization stocks of companies based in the United
    7·1 answer
  • Kyla goes to a car dealership to purchase a new Honda Accord. She is not willing to pay the listed sticker price for the car, an
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!