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Dima020 [189]
2 years ago
10

2. Best Ever Toys just paid its annual dividend of $1.78 per share. The required return is10.6 percent and the dividend growth r

ate is 1.43 percent. What is the expected value of this stock five years from now
Business
1 answer:
Scorpion4ik [409]2 years ago
7 0

Answer:

Expected value of stock is $20.84

Explanation:

The dividend discount method (DDM) is used to calculate the stock value. The commonly used formula for the Gordon Growth version of the DDM which focused on dividends,

Price of Stock = D5 / (r - g)

where:

D5 = Dividends after five year from the now = D ( 1 + g )^5

r = Required rate of return

g = Growth rate of dividends

Price of Stock = D ( 1 + g )^5 / (r - g)

Price of Stock = $1.78 ( 1 + 1.43% )^5 / (10.6% - 1.43%)

Price of Stock = $1.91 / 9.17%

Price of Stock = $20.84

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In the question Susan is positively reinforcing Alexandra's negative lazy attitude.

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2 years ago
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3 years ago
A new accountant working for Metcalf Company records $800 Depreciation Expense on store equipment as follows:
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3 years ago
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<u>Answer:</u>

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<em></em>

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