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babunello [35]
3 years ago
13

Present value of dividends: Fresno Corp. is a fast-growing company whose management expects it to grow at a rate of 30 percent o

ver the next two years and then slow down to a growth rate of 18 percent for the following three years. If the last dividend paid by the company was $2.15, estimate the dividends for the next five years. Compute the present value of these dividends if the required rate of return is 14 percent.
Business
1 answer:
klasskru [66]3 years ago
4 0

Answer:

Explanation:

Dividends through year 1 to 5:

D1 = 2.15*(1+0.30)^1 = 2.80

D2 = 2.15*(1+0.30)^2 = 3.63

D3 = 2.15*(1+0.30)^2 * (1+0.18)^1 = 4.29

D4 = 2.15*(1+0.30)^2 * (1+0.18)^2 = 8.58

D5 = 2.15*(1+0.30)^2 * (1+0.18)^3 = 12.86

PV (D1) = 2.80

PV (D2) = 3.63 *PVIF = 3.63 * 0.87719 = 3.19

PV (D3) = 4.29 * 0.76947 = 3.30

PV (D4) = 8.58 * 0.67497 = 5.79

PV (D5) = 12.86 * 0.59208 = 7.62

Total of all PV's = 22.69

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3 years ago
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During a period of severe inflation, a bond offered a nominal HPR of 83% per year. The inflation rate was 74% per year. a. What
Ierofanga [76]

Answer:

real HPR is 5.17 %

Explanation:

given data

nominal HPR = 83%

inflation rate = 74%

to find out

What was the real HPR on the bond over the year

solution

we find real interest rate r that is express as

r = \frac{R-i}{1+i}        .........................1

here R is nominal rate and i is inflation rate

so put here value

r = \frac{0.83-0.74}{1+0.74}

r = \frac{0.09}{1.74}

r = 0.05172

so real HPR is 5.17 %

3 0
3 years ago
Which of the following statements is true of a product sales-force structure? A product sales-force structure is characterized b
Klio2033 [76]

Answer:

The correct answer is A product sales-force structure is characterized by specialization along product lines.

Explanation:

Specialization refers to the dedication that a person or group of people makes within the activity to offer a good or sell a service. The execution of the tasks is carried out in a synchronized and collaborative way, or which ensures the willingness and performance of each area in achieving a general sales goal. Each employee is aware of their role within the sales chain, and puts all their efforts so that all the objectives proposed by management can be achieved.

8 0
3 years ago
If purchasing power parity holds, when a country's central bank decreases the money supply, its:_____.
polet [3.4K]

If purchasing power parity holds, when a country's central bank decreases the money supply, its <u>If purchasing power parity holds, when a country's central bank decreases the money supply, its price level (rises/falls) and its currency (appreciates/depreciates) relative to other currencies in the world. </u>

A theory of exchange rate determination and a means to compare average prices of goods and services between nations is purchasing power parity (PPP).

According to the hypothesis, fluctuations in the spot exchange rate are caused by importers' and exporters' actions, which are prompted by variations in prices across nations.

Alternatively, PPP contends that changes to a nation's current account may have an impact on the value of the currency's exchange rate on the foreign exchange (Forex) market.

In contrast, the interest rate parity theory postulates that fluctuations in the exchange rate are caused by investor actions (whose transactions are reported on the capital account).

The "law of one price" as it pertains to the overall economy is the foundation of PPP theory.

Hence, option A and D is correct.

To learn more about PPP here

brainly.com/question/27463586

#SPJ4

8 0
1 year ago
Firm X is being acquired by Firm Y for $35,000 worth of Firm Y stock. The incremental value of the acquisition is $2,500. Firm X
UkoKoshka [18]

Answer:

$34,789

Explanation:

Worth of stocks = $35,000

Incremental value of the acquisition = $2,500

Stock outstanding of Firm X = 2,000

Price per share of Firm X = $16

Stock outstanding of Firm Y = 1,200

Price per share of Firm Y = $40

Now,

Number of shares issued =  35,000 ÷ 40

or

= 875 shares

Value after merger = (Value of Stock x + Value of Stock Y + Synergy)

= (1200 × 40) + (2000 × 16) + 2500

or

= $82,500

Number of Stock Outstanding after merger  = ( 1,200 + 875 )

= 2,075

Thus,

Value per share after merger = $82500 ÷ 2,075

= 39.759

Therefore,

Actual cost of acquisition

= Value per share after merger × Number of shares issued

= 875 × $39.759

= $34,789

5 0
3 years ago
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