From a(n) _____ standpoint, the effect on performance motivation may be limited in ownership program because of the less obvious
1 answer:
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Answer:
the intrinsic value of the stock is 42.97
If the stock is priced at 40 dollars it would be a good idea to purchase the share as will provide a better yield than the cost of capital of 9.6%
Explanation:
First, we solve for the cost of equity using the CAPM:
risk free = 0.03
market rate = 0.09
premium market = (market rate - risk free) = 0.055
beta(non diversifiable risk) = 1.2
Ke = 0.09600
<em>Now we solve for the intrinsic price using the gordon model</em>
<em>with multi-stage growth:</em>
First, we calcualte the future dividends
grow rate Dividends
0 1.25
1 0.25 1.5625
2 0.25 1.953125
3 0.25 2.44140625
4 0.25 3.051757813
4 0.03 3.143310547
Now in the last year, we calcualte using the gordon model or constant grow:
32.7128182
Now we calculate and add together the present value of each of this future cash flow to determnate the intrinsic value ofthe share:
Present Value
1 1.5625 / (1+0.096)^1 = 1.425638686
2 1.953125 / (1+0.096)^2 = 1.625956531
and so on, giving the following values:
3 1.854421226
4 2.114987712
present value of the future dividends at 3% 22.67126448
<u>Finally we add them and get:</u>
42.97160726
Answer:
Yes, sales have increased as a result of the advertising campaign.
Explanation:
Find attached the explanation.
Note: I had to convert the explanation into both jpeg and files (both contains the same answer) when the answer box kept on rejecting my answer claiming it contains swear words when it does not.
