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Aliun [14]
3 years ago
6

A stock will pay no dividends for the next 3 years. Four years from now, the stock is expected to pay its first dividend in the

amount of $2.4. It is expected to pay a dividend of $3 exactly five years from now. The dividend is expected to grow at a rate of 5% per year forever after that point. The required return on the stock is 14%. The stock's estimated price per share exactly TWO years from now, P2 , should be $______.
Business
1 answer:
vesna_86 [32]3 years ago
8 0

Answer:

$24.59 or $24.6 or $25

Explanation:

Value of the share is the present value of dividend associated with that share. We need to calculate the present value of each dividend at year 2 and add them to determine the value of the share.

As given there is no dividend for 3 years,next dividend of $2.4 dividend will be discounted for two years and $3 dividend for three years. After that we need to calculate the  present value using DVM and discount this value for 4 years.

Value of Stock = [ $2.4 (1+14%)^-2 ] + [ $3 (1+14%)^-3 ] + [ $3(1+5%) / (14%-5%) ] x (1+14%)^-4

Value of Stock = $1.85 + $2.02 + $20.72 = $24.59

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Prior to the closing, one final inspection should take place. This is also known as the final walk through.

<h3>What is walk through inspection?</h3>

Just prior to closing, a walk-through inspection is performed to make sure the property is still in good shape, there hasn't been any additional damage, and all of the fixtures included in the sale are still there.

A buyer and their real estate agent will tour the house together during the walkthrough. They'll make sure there isn't any fresh damage, that all of the house's systems and appliances that are included in the sale are still in good functioning order, and that the house is clean.

<h3>What is purpose of walk-through?</h3>

The objectives of a walk-through are as follows: By involving stakeholders from both inside and outside the software discipline, you can gather information about the subject of the document. Describe and explain the document's contents. Obtain agreement on the document as a whole.

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8 0
1 year ago
Taylor Company began manufacturing operations on January 2, 20X1. During 20X1 Taylor reported pre-tax book income of $150,000 an
aleksley [76]

Answer:

$11,300

Explanation:

The computation of the deferred tax asset is shown below:

= 21%(20X2 Expense) + 25%(20X3 and 20X4 Expense)

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= $6,300 + $3,750 + $1,250

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3 0
3 years ago
Costs of Acquiring Fixed Assets
Zepler [3.9K]

Answer:

The answer is given below:

Explanation:

a.

1.Yes

2.Yes

3.Yes

4.Yes

5.Yes

6. Yes

b.

7.No

8.Yes

9.Yes

10.No

11.No

12.No

As a rule of thumb,those costs which increase the value or useful life of asset should be capitalized where as those costs that are incurred to maintain the usage of asset are revenue expenditure and should be charged to income statement not the asset.

8 0
3 years ago
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e.  $0

SEP PLANS ONLY PERMITS EMPLOYER CONTRIBUTIONS.FOR A SELF -EMPLOYED INDIVIDUAL,CONTRIBUTIONS ARE LIMITED TO 25% OF YOUR NET EARNINGS FROM SELF-EMPLOYMENT (NOT INCLUDING CONTRIBUTIONS FOR YOURSELF) UP TO $57,000 (FOR 2020) ; $56,000 FOR 2019.

6 0
3 years ago
The competitive firm's demand curve is: a. unit elastic over the relevant range of output. b. perfectly elastic over the relevan
shepuryov [24]

Answer:

perfectly elastic over the relevant range of output.

Explanation:

In a perfect competition there are many firms in the market selling goods that are usually homogeneous in nature. Each individual firm will not be able to influence the price for which it offers goods and services to the customer.

The firm's are price takers and there is no barrier to entry.

This results in a situation where for all levels of quantity demanded there is no change in price, and demand curve is a horizontal line.

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