Assume initially that the price of X (the quantity of which is measured on the horizontal axis) is $9 and the price of Y (the qu
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Answer:
Yes, you would be interested in buying the stock at $20 because it's underpriced. It's actual intrinsic value is $23.76
Explanation:
Use dividend discount model to solve this question;
D1 = 2.75(1-0.10) = 2.475
D2 = 2.475 (1-0.10) = 2.228
D3 =2.228 (1-0.10) = 2.005
D4 = 2.005(1-0.10) = 1.805
D5 = 1.805(1+0.05) = 1.895
Next, find the Present values of each dividend;
PV (D1) = 2.475 /1.12 = 2.2098
PV (D2) = 2.228/1.12² = 1.7761
PV (D3) = 2.005/1.12³ = 1.4271
PV (D4) = 1.805/1.12^4 = 1.1471
Next find PV of constant growing dividends
PV (D5 onwards) =
PV (D5 onwards) = 17.2044
Next, sum up these PVs to find the price of the stock;
2.2098 + 1.7761 + 1.4271 + 1.1471 + 17.2044 = $23.76
Yes, you would be interested in buying the stock at $20 because it's underpriced. It's actual intrinsic value is $23.76
Answer:
Option C would be the correct answer.
Explanation:
In the given question, options are not mentioned. Please find the attachment of the complete query.
- IFRS sets universal guidelines because whatever income accounts across the global economy can indeed be appropriate, straightforward, as well as equivalent.
- Its purpose is to provide a spatial relationship because of how government entities compile certain financial reports as well as publish them.
Certain alternatives do not apply to the procedure outlined. But the option above would be correct.
