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Savatey [412]
3 years ago
15

Global Exporters recently announced that it will pay annual dividends of $1.10; $1.25, and $1.30 a share over the next three yea

rs, respectively. After that, the firm plans to increase its dividend by 2.5 percent annually. What is one share of this stock worth to you today if you require an 11 percent rate of return?

Business
2 answers:
Whitepunk [10]3 years ago
4 0

Answer:

$13.28

Explanation:

Worth of the stock is the present value of all the cash flows associated with the stock. Dividend is the only cash flow that a stock holder receives against its investment in the stocks. We need to calculate the present values of all the dividend payments.

Formula for PV of dividend

PV of Dividend = Dividend x ( 1 + r )^-n

1st year

PV of Dividend = $1.10 x ( 1 + 11% )^-1 = $0.99

2nd year

PV of Dividend = $1.25 x ( 1 + 11% )^-2 = $1.01

3rd year

PV of Dividend = $1.30 x ( 1 + 11% )^-3 = $0.95

After three years the dividend will grow at a constant rate of 2.5%, so we will use the following formula to calculate the present value

PV of Dividend = [ $1.30 x ( 1 + 2.5% ) / ( 11% - 2.5% ) ] x [ ( 1 + 11% )^-4 ]

PV of Dividend = $10.33

Value of Stock = $0.99 + $1.01 + $0.95 + $10.33 = $13.28

Paraphin [41]3 years ago
3 0

Answer:

$14.42

Explanation:

Please kindly check attachment for the step by step solution of the given problem.

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2 years ago
Mortensen Industries, which uses a process-costing system, adds material at the beginning of production and incurs conversion co
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Answer: 60%

Explanation:

Find the ending work in process.

Materials are complete at inception so the Equivalent units of Materials represent the total units.

Ending WIP will therefore be:

= Materials EUP - Units started and completed

= 5,000 - 3,500

= 1,500 units

Stage of completion is based on Conversion.

Conversion EUP = Total started and completed + (x% * Closing WIP)

4,400 = 3,500 + (x% * 1,500)

4,400 = 3,500 + 15x

15x = 4,400 - 3,500

15x = 900

x = 900/15

x = 60%

<em>Conversion is 60% complete so this is the stage of completion. </em>

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3 years ago
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Answer:

formed a valid contract because Rachel's outward expressions showed the formation of a contract.

Explanation:

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The contract is considered as 'valid' and considered to be a verbal agreement as soon as Rachel proposed a price and Julius agreed upon it.

One thing to remember, Even though this contract is considered as valid , it would be hard for Julius to held Rachel accountable to court since he has no way to proof that the verbal agreement has been made.

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I hope it helped you!
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