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ki77a [65]
3 years ago
12

ABC common stock just paid a dividend of $2.50 per share. The ABC dividend is expected to grow 20% per year for two years, and t

hen the growth rate will settle into a constant 6%. If the discount rate is 15% on ABC common stock, what should be the current share price
Business
1 answer:
Liula [17]3 years ago
6 0

Answer and Explanation:

Given that the dividend will grow at 20% for two years and then a constant 6% at third year

1st year dividend at 20%= $3

Present value of the dividend for the first year=PV factor at 15%(from table) = $2.61

2nd year dividend at 20% = $3.60

Present value of the dividend for the second year = PV factor at 15%(from table) $2.72

3rd year dividend at 6% growth rate =

$42.40

Present value of the dividend for the third year = PV factor at 15% = $32.06

Current price of the stock =$2.61+$2.72+$32.06

=$37.39

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Discuss any one computer-related security issue and one way to resolve the issue.
aleksandrvk [35]
Hacks and to fix em you delete your account
4 0
3 years ago
Read 2 more answers
Storico Co. just paid a dividend of $1.50 per share. The company will increase its dividend by 20 percent next year and then red
jeyben [28]

Answer:

The selling price today = $28.536

Explanation:

The question states that D0 is $1.5.

To calculate price, we need to calculate Present value of future dividends along with a terminal value from the time the dividend growth is becoming constant.

The D1 growth will be 20% of D2.

The fall in dividend growth will be 5% till it reaches 5%.

  • P0 = D1 / (1+r)  +  D2 / (1+r)²  +  D3 / (1+r)³  + D4 / r-g
  • Where,
  • r = required rate of return
  • g = growth rate

Thus,

P0 = 1.5*(1.2) / (1+0.15)  +   1.5*(1.2)*(1.15) / (1+0.15)²  +   1.5*(1.2)*(1.15)*(1.1) / (1+0.15)³   +  1.5*(1.2)*(1.15)*(1.1)*(1.05) / (0.15 - 0.05)

P0 = $28.536

4 0
3 years ago
Jackie’s Coffee is a sit-down café with a wait staff that takes customers’ orders. Jackie's competitor, Johnny's Coffee Shack, s
Pani-rosa [81]

Answer:

differentiated by quality/design

Explanation:

In this scenario the two coffee shops have different strategies for sale. While Jackie's coffee is a sit down cafe with a waiter service that takes personalised orders, Johnny's coffee sells at various kiosks it owns.

These two businesses are differentiated by quality or design. Jackie's has more quality because of the personalised service provided to customers.

Jackie uses design of a sit down cafe in one location, while Johnny's business design is to sell coffee at various locations (kiosks)

3 0
3 years ago
You are the CFO of Designer Brands and expect your firm to generate FCFs of $550,000 per year (starting next year) for 10 years.
Lemur [1.5K]

I would value the Designer Brand as $16,970,189.21.

<h3>What is the value of the designer brand?</h3>

The value of the designer brand can be determined using the two-stage FCF growth model.

FCF each year from year 1 to 10 = $550,000

FCF from year 11 = ($550,000 x 1.01) / (0.04 - 0.01) = $18,516,666.67

The present value of the FCF would be determined next:

($550,000 / 1.04) + ($550,000 / 1.04^2) + ($550,000 / 1.04^3) + ($550,000 / 1.04^4) + ($550,000 / 1.04^5) + ($550,000 / 1.04^6) + ($550,000 / 1.04^7) + ($550,000 / 1.04^8) + ($550,000 / 1.04^9) + ($550,000 / 1.04^10) + ( $18,516,666.67 / 1.04^10) = $16,970,189.21

To learn more about FCF, please check: brainly.com/question/8058024

3 0
2 years ago
The typical horizontal flows of information in an accounts payable/cash disbursements process might include all of the following
harkovskaia [24]

Answer:

d. a copy of a receiving report is sent to the cashier

Explanation:

In the case of the horizontal flows with respect to the account payable or cash disbursements, it involved the invoice i.e. collected from the vendor, the voucher i.e. returned and the approved disbursement voucher is sent to the cashier but it does not involve the receiving report that sent to the cashier

Therefore the correct option is d.

3 0
3 years ago
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