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Bogdan [553]
3 years ago
5

P. Daves Inc's stock is currently sells for $45 per share. The stock's dividend is projected to increase at a constant rate of 4

% per year. The required rate of return on the stock, rs, is 12%. What is Daves' expected price 6 years from now? a. $52.68 b. $55.12 c. $54.41 d. $56.94 e. $53.71
Business
2 answers:
Svetllana [295]3 years ago
8 0

Answer:

The price of the stock six years from now will be $56.94

Explanation:

To calculate the price of a stock that pays a dividend which grows at a constant rate forever, we use the constant growth model of DDM. The current price of stock using the constant growth model is calculated as follows,

P0 = D1 / r - g

As, we don't know the D1, that is dividend expected for the next year, we will calculate it first,

45 = D1 /  (0.12 - 0.04)

45 * (0.12-0.04)  =  D1

45 * (0.08) = D1

3.6 = D1

We use the D1 to calculate the price today. Thus, we will use D7 to calculate the price six years from now.

D7 = D1 * (1+g)^6

P6 = 3.6 * (1+0.04)^6  /  (0.12 - 0.04)

P6 = $56.939 rounded off to $56.94

Nataly_w [17]3 years ago
3 0

Answer:

$56.94

Explanation:

Growth rate=4%

Current stock price=$45

Time in year=6

Future value of stock=45*1.04^6=56.94

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A new faculty member at the local university pays $1,500 per month to rent an apartment in the downtown area. She teaches on cam
Naddik [55]

Answer:

$2,700

Explanation:

Calculation for what should this professor be willing to pay in rent per month

First step is to calculate the Transportation cost per week

Transportation cost = ($25*4 hrs)* 3 per week

Transportation cost =$100*3 per week

Transportation cost= 300 a week

Now let calculate the rent per month

Rent per month= $1500 + ($300*4)

Rent per month=$1,500+$1,200

Rent per month= $2,700

Therefore what should this professor be willing to pay in rent per month to live near campus if her hourly wage rate is $25 will be $2,700

3 0
3 years ago
If the government of Balancia runs a deficit of $50 million per year in Year 1 and in Year 2 due to its recession, but then has
natima [27]

Answer:

Cyclically balanced budget

Explanation:

6 0
3 years ago
Assume the economy is operating at full employment. If the economy enters a sudden economic expansion, the quantity of money ava
eduard

Answer:

the qquantity of money available in the economy will increase because there will be more foreign  investments plus now the economy will start exporting and will reduce its imports so the quantity of money will increase.

3 0
3 years ago
Read 2 more answers
The narrowest definition of the money supply (M1) includes:
fenix001 [56]

Answer:

c. cash, checking account balances, and travelers' checks.

Explanation:

Money Supply is the concept that means the amount of the liquid financial products and total currency in the market or economy. It is regulated the macro-economically by the monetary policy. So, there are types of measures of money supply or stock:

-M0: narrowly, it means the hard currency in circulation

-MB: it equals M0+ the hard currency which are not technically in circulation and in bank reserves.

-M1: it is the most common one and equals M0 plus checking accounts plus travelers’ checks and other checkable deposits.

-M2: covers M1 and saving accounts and CDs.

-M3: it surrounds the larger deposits.

-MZM: finally, this indicates the money market deposits.

That’s why we could notice that M1 narrowly means the cash, checking account and travelers’ checks.

5 0
4 years ago
Using the following accounts and balances, prepare the Stockholders’ Equity section of the balance sheet. Refer to the lists of
uysha [10]

Answer:

Explanation:

Stockholder's Equity

Paid in Capital:  

      Common Stock  $48,000,000

     Paid in Capital in excess of Par - Common Stock $6,400,000  

     Paid in Capital from sale of Treasury Stock $4,500,000

[58,900,000]

Total Paid in Capital  $58,900,000

Retained earnings  $63,680,000

Total Paid in Capital & Retained Earnings  $122,580,000

Deduct: Treasury Stock  $5,200,000

Total Stockholder's Equity  $117,380,000

7 0
4 years ago
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