1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
CaHeK987 [17]
3 years ago
13

Drake Custom Cycles' common stock currently pays no dividends. The company plans to begin paying dividends beginning 3 years fro

m today. The first dividend will be $3.00, and dividends will grow at 5 percent per year thereafter. Given a required return of 15 percent, what would you pay for the stock today
Business
1 answer:
kifflom [539]3 years ago
5 0

Answer:

The maximum price that should be paid for this stock today is $20.71

Explanation:

The company will pay its first dividend in Year 3 which means the dividend of $3 is D3. Using the constant growth model of DDM we can calculate the price of this stock at year 3. We will discount back that to the present value to calculate the price of the stock today. the price at year 3 using the constant growth model will be,

P3 = D4 / r - g

P3 = 3 * (1+0.05)  /  (0.15 - 0.05)

P3 = $31.5

The maximum price that should be paid for this stock today is,

P0 = 31.5 / (1+0.15)^3

P0 = $20.71

You might be interested in
A young man is badly injured when his cell phone battery catches fire. What type of insurance should the manufacturer of the cel
Leno4ka [110]

either Fire Legal Liability Coverage or state farm either will do but im leaning more towards the fire laibilty coverage

hope this helps:)sorry if it doesnt

8 0
3 years ago
Read 2 more answers
The police need to have _____ to obtain a search warrant.
solniwko [45]

Answer:

a

Explanation:

they need a absolute certainty to search your house like what

7 0
3 years ago
A pen that costs five cents to make may cost a consumer $2 to buy. according to critics, this is an example of ________.
inna [77]
I'm not sure I believe its mark up or supply and demand
3 0
3 years ago
Read 2 more answers
Jupiter Explorers has $5,600 in sales. The profit margin is 3 percent. There are 4,000 shares of stock outstanding, with a price
Irina18 [472]

Answer:

Price-earning ratio is 28.57 .

Explanation:

Price earning is a ratio widely used by common stock holder in stock market. The ratio is used to measures share price in relation to earning per share. The ratio tells us years require to recover amount spend on acquisition of share.

Detail calculation is given below.

Sales                      $ 5,600  -A

Net profit               $    168   -B

EPS                         $ 0.042 -B/4000

Price-earning ratio = 1.2/EPS  = 28.57  

6 0
3 years ago
The National Recovery Administration (NRA) failed largely because a Harold Ickes, the head of the agency, proved to be an incomp
Licemer1 [7]

Answer:

b. it required too much self-sacrifice on the part of industry, labor, and the public.

Explanation:

Franklin Delano Roosevelt was an American politician and statesman who was elected as the 32nd President of the United States of America in 1933. He was born on the 30th of January, 1882 in Hyde Park, New York, United States of America.

The National Recovery Administration (NRA) was an agency of the federal government of the United States of America, which was established in 1933 by President Franklin Delano Roosevelt.

The main purpose of the National Recovery Administration (NRA) was to stimulate, enhance or facilitate business recovery, promote compliance and reduce unemployment significantly

However, the National Recovery Administration (NRA) failed largely because it required too much self-sacrifice on the part of industry, labor, and the public.

5 0
3 years ago
Other questions:
  • At the closing on June 15, the buyer is assuming a mortgage presently on the property, on which the monthly interest charge is c
    11·1 answer
  • Huong is opening an international food store. Though her products will span the globe, she wants to focus on items from the Midd
    15·1 answer
  • Banks pay their customers interest on the money in their accounts for what reason? A. That money earns interest when the bank lo
    8·1 answer
  • When a certain portion of the end product must consist of domestically produced goods or that a certain portion of the final cos
    5·1 answer
  • As a businessperson planning to open a new small business, you know that the business plan should not contain
    6·1 answer
  • pre-writing is important for all of the following reasons except: a. it is where the ideas are generated. b. it gets ideas down
    10·2 answers
  • "Google employs the practice of team building and rewards ideas that are outside the box. They are likely to have ________ compa
    8·1 answer
  • Which one of the following is NOT included in the Marketing Mix?
    7·2 answers
  • 6. Respond to the following prompts about the goals and effects of government spending on the
    15·1 answer
  • A record of payroll infornation including computation of gross and net pay, for each employee for the pay period is called a:___
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!