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Deffense [45]
4 years ago
6

Radverb Inc. paid a dividend of $2.00 last year. The company expects to increase the dividend at a constant rate of 2% per year,

indefinitely. The current price for the stock is $34. What will the price of Radverb's stock be if the required return falls by half (by 50%)?
Business
1 answer:
Nezavi [6.7K]4 years ago
7 0

<u>Solution and Explanation:</u>

The given ke  = 0.08 , Ke = 8%

Now, the required return falls by half (by 50%)

Ke (revised) = 8 percent multiply with the 50 percent = 4%

The Price of Radvob’s stock = 2(1.02) / 0.04-0.02 =$102

Do= $2

G=2%

The given Current price = $34

Ke= required return = ?

The Current price = \mathrm{D}_{0}(1+\mathrm{G}) / \mathrm{K}_{\mathrm{e}}-0.02

Ke=0.08 , Ke=8%

Now, the required return falls by half(by 5%)

Ke (revised) = 8 percent multiply with 50 percent = 4%

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Ethics serve as a guide to moral daily living and helps us judge whether our behavior can be justified. Ethics refers to society's sense of the right way of living our daily lives. It does this by establishing rules, principles, and values on which we can base our conduct.

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3 years ago
If a good is normal, then a decrease in price will cause a substitution effect that is?
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Explanation:

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8 0
1 year ago
Halsted, Inc., has outstanding 10,000 shares of $200 par value, 7% nonparticipating, cumulative preferred stock and 10,000 share
solniwko [45]

Answer:

Preferred stock holders' dividend = $280000

Common stock holders' dividend = $8000

Explanation:

A cumulative preferred stock is one whose dividends are accumulated in arrears and are to paid in the following year(s), if the company fails to pay or partially pay the dividends in a certain year. The yearly dividend on preferred stock is,

Preferred stock dividend = 10000 * 200 * 0.07 = $140000

As the dividends on preferred stock are in arrears for one year, the company will pay a dividend this year on preferred stock of,

Preferred stock dividend to be paid = 140000 + 140000 = $280000

Thus, out of the announced dividend of $288000, $280000 will be paid to the preferred stock holders while the remaining $8000 will be paid to the common stock holders.

6 0
3 years ago
You purchase a bond with a coupon rate of 8.6 percent, a par value of $1,000, semiannual coupons, and a clean price of $860. If
arlik [135]

Answer:

The answer is $881.5

Explanation:

Solution

Given that:

The accrued interest is  refers to the payment (coupon) for the time with the fraction of the time that has exceed since the last coupon payment.

Since we have a semiannual coupon bond, the coupon payment for six months is 1/2 of the annual coupon payment.

Three months has exceeded since the last coupon payment.

So the accrued interest for the bond is given below:

Accrued Interest = $86/2 * 3/6

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Therefore the invoice price is $881.5

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4 years ago
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I HOPE ITS HELP YOU

8 0
2 years ago
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