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
LUCKY_DIMON [66]
3 years ago
13

Michael's, Inc., just paid $2.20 to its shareholders as the annual dividend. Simultaneously, the company announced that future d

ividends will be increasing by 4.8 percent. If you require a rate of return of 9 percent, how much are you willing to pay today to purchase one share of the company's stock?
Business
1 answer:
Whitepunk [10]3 years ago
5 0

Answer:

The maximum price that should be paid for one share of the company today is $54.895

Explanation:

The price of a stock that pays a dividend that grows at a constant rate forever can be calculated using the constant growth model of Dividend discount model (DDM) approach. The DDM values a stock based on the present value of the expected future dividends. The formula for price today under this model is,

P0 = D1 / r - g

Where,

  • D1 is the expected dividend for the next period or D0 * (1+g)
  • r is the required rate of return
  • g is the growth rate in dividends

SO, the maximum that should be paid for this stock today is:

P0 = 2.2 * (1 + 0.048)  /  (0.09 - 0.048)

P0 = $54.895 rounded off to $54.90

You might be interested in
What is the business <br>​
Lisa [10]

pls follow me

Explanation:

The term "business" also refers to the organized efforts and activities of individuals to produce and sell goods and services for profit.

5 0
3 years ago
When calculating the net operating income of a property, it is important to identify any expenses that will be incurred in attem
Fantom [35]

Answer:

The correct answer is letter "C": Mortgage payments.

Explanation:

Net Operating Income or NOI reflects income after operating expenses deducted but before income taxes and interest are deducted. If the result is a positive value it is called <em>Net Operating Income</em>. If the figure is negative, it is referred to as <em>Net Operating Loss</em>.

Net operating income is often used to calculate real estate income, such as residential properties or commercial properties. <em>NOI is calculated by determining the Gross Operating Income (Gross potential income minus vacancy and credit loss) and subtracting the operating expenses (maintenance, fees, and insurance). </em>

<em> </em>

Thus, <em>mortgage payments are not considered in the calculation of the NOI.</em>

6 0
3 years ago
vasily is a manager at a large snack foods company. vasily believes his company would benefit from being larger and thinks the s
prohojiy [21]

Vasily pushes for an acquisition anyway. The reason for this acquisition is principal agent problem.

A conflict of interests between a person or group and the agent appointed to act on their behalf is known as the principal-agent dilemma. It is possible for an agent to do actions that are not in the principal's best interests.

The principal-agent problem is as complex as the range of principal and agent responsibilities. It can happen in any circumstance where the primary or owner of an asset transfers direct control of the asset to a third party or agent.

Agency costs are the possibility that the agent will take actions that are not in the principal's best interests. In order to align priorities and solve a principal-agent problem, the rewards system may need to be changed.

To know more about principal agent:

brainly.com/question/15847415

#SPJ4

3 0
1 year ago
When retained earnings are not enough to meet their long-term funding needs, businesses may be able to raise funds by:
eimsori [14]

Answer:

A.selling common stock.

Explanation:

A business raises capital through debt or equity. Debts represent borrowed funds, which include bonds and loans. Equity represents the owner's funds, which comprises of shares and retained earnings.

Should a business not have enough funds for its long term needs, it can sell more shares to the existing shareholders or the general public.  Shares represent ownership of the company. Selling common stock means that the company will receive the funds it requires in exchange for ownership rights.  Shareholder earns dividends as a reward for providing capital to businesses.

4 0
3 years ago
Western Energy makes quarterly deposits into an account reserved for purchasing new equipment two years from now. The interest p
Iteru [2.4K]

Answer:

a. 2 years

b. 1 year

c. 12 times

Explanation:

Interest period is the duration of the deposit. It is the length of time the money would remain in deposit. This is 2 years according to the question

Compounding period = number of times interest would be paid. In the question, this is a year. So interest would be paid every year

The compounding frequency - it is the number of times the deposit would be compounded. It is 12 months

The future value of the deposit can be determined using this formula :  

FV = P (1 + r/m)^nm

FV = Future value  

P = Present value  

R = interest rate  

N = number of years

m = number of compounding  

8 0
2 years ago
Other questions:
  • Which of these is not considered one of the big six reportable illness E. coli HIV or norvirus
    15·1 answer
  • You are placing an order for printer paper for your office, and the supplier offers to
    15·1 answer
  • you are the manager of a hamburger joint with a marginal cost of $6.00 per hamburger. The hamburger joint is a local monopoly ne
    14·1 answer
  • At the end of 2021, Havana contributed $696 thousand to the pension fund and benefit payments of $624 thousand were made to reti
    5·1 answer
  • Risk identification is determining which risks may adversely affect the development of the project work breakdown structure and
    12·1 answer
  • Now that you are successful in your new position, you have decided to reward yourself with a new (or new to you) vehicle. Source
    9·2 answers
  • 1) What usually initiates data input into a system? A) The transaction system automatically checks each hour to see if any new d
    13·1 answer
  • Health food corporation's bonds have 7 years remaining to maturity. the bonds have a face value of $1,000 and a yield to maturit
    6·1 answer
  • Which of the following is NOT a liability?
    10·2 answers
  • Dunn Sporting Goods sells athletic clothing and footwear to retail customers. Dunn's accountant indicates that the firm's operat
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!