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Alexeev081 [22]
3 years ago
13

Valorous Corporation will pay a dividend of $2.00 per share at this year's end (at t = 1) and a dividend of $2.50 per share at t

he end of next year (at t = 2). It is expected that the price of Valorous' stock will be $50 per share after two years (at t = 2). If Valorous has an equity cost of capital of 8%, what is the maximum price that a prudent investor would be willing to pay for a share of Valorous stock today?
Business
1 answer:
seraphim [82]3 years ago
8 0

Answer:

The maximum price that should be paid for one share of this stock today is $46.86

Explanation:

Using the dividend discount model, we can calculate the price/fair value of the stock today. The DDM bases the price of the stock on the present value of the expected future inflows from the stock in the form of dividends and terminal value. The discount rate used to discount the cash flows is the cost of equity or required rate of return on stock.

The price of this stock at time zero (t=0) will be,

Prcie = 2 / (1+0.08)  +  2.5 / (1+0.08)^2  +  50 / (1+0.08)^2

Price = $46.86

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B. A company that makes many sales

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I got the answer right on Edge.

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3 years ago
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Explanation:

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8 0
3 years ago
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Equipments, Employee, Working Environment, Lack of Training, Finance, Time, etc

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4 0
2 years ago
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Profit maximization is the primary intention of any business, and consequently it's also an goal of monetary management. In monetary control, it represents the procedure or the technique by which income incomes consistent with percentage (EPS) is improved.

It enables in attaining the gadgets to maximize the business operation for earnings maximization. The ultimate goal of any commercial enterprise is to earn a large quantity of go back in terms of earnings. for this reason, this goal of financial control considers all the viable approaches to boom the profitability of the enterprise situation.

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Learn more about Profit maximization here: brainly.com/question/13464288

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8 0
1 year ago
List some ways (at least two (2)) to get money INTO your checking account.
alina1380 [7]
Go to work, and cash your check.
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Once you get money by working you need to go cash your check then you are able to get money into your checking account.
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