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
Elanso [62]
3 years ago
8

BioScience Inc. will pay a common stock dividend of $5.20 at the end of the year (D1). The required return on common stock (Ke)

is 14 percent. The firm has a constant growth rate (g) of 7 percent. Compute the current price of the stock (P0). (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Business
1 answer:
REY [17]3 years ago
5 0

Answer:

The current price of the stock = $74.29

Explanation:

Po= Do(1+g)/ke-g

    =5.20(1+0.07)/14%-7%

    = 5.564/0.07

    = $79.4857

The current price of stock = Mv- excluding any dividend currently payable

                                           = $79.4857 - $5.20

                                           = $74.29.

Dividend valuation model assumed that the value of the stock is the sum of the future expected stream of income on the stock discounted at a suitable cost of capital.

It also assumed that all investors will be rational and have the same  expectations from the portfolio of an investment. However, this is not always the case in reality.

   

You might be interested in
A store has a $179.99 item on sale for 25% off, plus an additional 20% off. What is the percentage of savings off on this item?
Irina-Kira [14]

Answer:

Percentage of savings off=45%

Explanation:

Savings=discount×Original item price

First save=(25/100)×179.99=$44.9975

Additional save=(20/100)×179.99=$35.998

Total savings=(44.9975+35.998)=$80.9955

Percentage of savings=(Total saving/Original price)×100

(80.9955/179.99)×100=45%

8 0
3 years ago
Turnips and Parsley common stock sells for $39.86 a share at a market rate of return of 9.5 percent. The company just paid their
valkas [14]

Answer:

The rate of growth of their dividend is 6.30%.

Explanation:

This problem requires us to calculate the growth rate at which the dividend will grow. The market value of share and market rate of return is also given in the problem. So we can easily calculate it using market valuation formula.

MV = D(1+G%)/ke

39.86 = 1.2 (1+G%)/(9.5%-G%)

G =  6.30%                    

4 0
3 years ago
Departmental Overhead Rates Lansing, Inc., provided the following data for its two producing departments:
QveST [7]

Answer and Explanation:

The computation is shown below:

1. Overhead rates

For Molding Deptt

= Total Estimated overhead ÷ Total Machine hours

= $400,000 ÷ 5,000

= $80 per machine hour

For Polishing Deptt

= Total Estimated overhead ÷ Total Labor hours

= $80,000 ÷ 20,000

= $4 per machine hour

2. Overheads assigned to Form A is

= (80 × 3500) + (4 × 5000)

= $300,000

Overheads assigned to Form B is

= (80 × 1500) + (4 × 15000)

= $180,000

Now

Overhead cost per unit

Form A = $300,000 ÷ 30,000 = $10 per unit

Form B = $180,000 ÷ 50,000 = $3.6 per unit

4 0
3 years ago
Which sentence identifies the concept of perishability? Tourism is a service-oriented field in the goods-service continuum. Four
allochka39001 [22]

Thirdly, storage of services is not possible, as services are consumed when offered to a customer.

Answer: Option 3.

<u>Explanation:</u>

Perishable is a feature where a good or service can not be stored for long. They might get hampered and do not remain like their original self if they are stored.

Services have a perishable nature in the sense that they can not be stored like some of the goods which can be stored. The services are to be consumed then and there at the moment when they are offered to the customers. They can not be kept reserved.

3 0
3 years ago
Jorge considers himself a risk-averse person. He takes the opportunity to switch to a new job where there are two possible outco
Lunna [17]

Answer:

Jorge is not risk-averse

Explanation:

Risk averse means to reluctant to take risk

Since theres a 80% chance that Jorge will get laid off and end up with a job that will pay him $10000 less is very risky instead where he'll earn $30000 where the chance is 20% that he'll get the job.

5 0
3 years ago
Other questions:
  • Gordon Corporation produces 1,000 units of a part per year which are used in the assembly of one of its products. The unit cost
    9·1 answer
  • Using the expanded accounting equation, solve for the missing amount
    6·1 answer
  • Which of the following selections effectively use the "you" view.
    8·1 answer
  • An equipment cost $80,000 initially. The market value has been declining at the rate of $15,000 yearly. The O &amp; M costs in y
    8·1 answer
  • Samson Enterprises issued a ten-year, $20 million bond with a 10% interest rate for $19,500,000. The entry to record the bond is
    9·1 answer
  • It's time for another financial calculator problem. A UCF student (who has not taken FIN 2100) decides that he really needs a la
    10·1 answer
  • Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is
    6·1 answer
  • You are considering working for United Way upon graduation. Explain how the marketing goals, strategies, and markets for the non
    5·1 answer
  • Vaughn Company has the following equivalent units for July: materials 15340 and conversion 17700. Production cost data are: Mate
    13·1 answer
  • Badger and Fox are forming a partnership. Badger invests a building that has a market value of $352,000; the partnership assumes
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!