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castortr0y [4]
3 years ago
7

A stock's dividend is expected to grow at a constant rate of 5% a year, which of the following statements is CORRECT? The stock

is in equilibrium. a. The stock's price one year from now is expected to be 5% above the current price. b. The stock's dividend yield is 5%. c. The stock's required return must be equal to or less than 5%. d. The expected return on the stock is 5% a year.
Business
1 answer:
Llana [10]3 years ago
7 0

Answer:

a. The stock's price one year from now is expected to be 5% above the current price.

Explanation:

Under gordon model:

\frac{divends}{return-growth} = Intrinsic \: Value

If we calculate the value of the stock for the year after that:

\frac{divends x (1 + growth)}{return-growth} = Intrinsic \: Value

to calculate the value of the increase we divide next year over current year.

\frac{divends(1+growth)}{return-growth} \div \frac{divends}{return-growth}\\\\\frac{divends(1+growth)}{return-growth} \times\frac{return-growth}{divends}\\\\\frac{divends(1+growth)}{divends}= 1+ growth

We have demostrate that next year stock should increase by 1 + growth so statement c is correct.

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8 0
1 year ago
Bradley is sitting on his porch enjoying his very large front yard and drinking a lemonade when chris, a kid from down the stree
Anestetic [448]
<span>Chris may be able to recover money from the courts on the basis of quasi contract. A quasi contract is an obligation of one party to another imposed by law independently of an agreement between the parties.</span>
3 0
3 years ago
If a typical firm in a perfectly competitive industry is earning profits. True or False
Gwar [14]

Answer:

The answer is True.

Explanation:

Because, then new firms will enter in the long run causing market supply to decrease, market price to fall , and profits to decrease.

6 0
3 years ago
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to c
romanna [79]

Answer:

the journal entries:

to record the contract

Dr Accounts receivable 96,000

Dr Bonus receivable 2,400

    Cr Service revenue 98,400

to record adjustment of bonus receivable at month 5:

Dr Service revenue 6,400

    Cr Bonus receivable 6,400

to record service revenue for the fifth month:

Dr Accounts receivable 96,000

Dr Bonus receivable 800

    Cr Service revenue 96,800

to record getting the bonus:

Dr Cash 32,000

    Cr Bonus receivable 6,400

    Cr Service revenue 25,600

Explanation:

total value of the contract:

[($96,000 x 8) + $32,000] x 0.8 = $640,000

[($96,000 x 8) - $32,000] x 0.2 = $147,200

total expected value = $787,200

expected value of the bonus = $787,200 - ($96,000 x 8) = $19,200, monthly bonus receivable $19,200 / 8 = $2,400

the adjustments required during the fifth month:

[($96,000 x 8) + $32,000] x 0.6 = $480,000

[($96,000 x 8) - $32,000] x 0.4 = $294,400

total expected value = $774,400

expected value of the bonus = $774,400 - ($96,000 x 8) = $6,400, monthly bonus receivable $6,400 / 8 = $800

5 0
3 years ago
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Dmitriy789 [7]

Managers are a critical part of any successful organization because<u> "they use their skills and knowledge to move the organization forward towards established goals".</u>


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Basically, the part of managers is to direct the associations toward objective achievement. All associations exist for specific purposes or goals,and managers are in charge of joining and utilizing hierarchical assets to guarantee that their associations accomplish their motivations.

6 0
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