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
Nana76 [90]
3 years ago
14

CDB stock is currently priced at $80. The company will pay a dividend of $4.57 next year and investors require a return of 10.8

percent on similar stocks. What is the dividend growth rate on this stock
Business
1 answer:
Stels [109]3 years ago
3 0

Answer:

The answer is 5.09%

Explanation:

The model used in this question is the Dividend Discount Model and it is one of the methods used in determining the price of stock. Here, the price of stock had already been determined. We are looking for one of the variables (growth rate) used in determining the price.

The formula for determining price of stock is:

Po = D1/r - g

Where Po is the price of stock

D1 is the dividend for next year

r is the rate of return

g is the dividend growth rate

$80 = $4.57/0.108 - g

Cross multiply:

8.64 - 80g = 4.57

80g = 8.64 - 4.57

80g = 4.07

g = 4.07/80

g =0.05088

g = 5.09%

You might be interested in
The concept of economic profit is used for making a decision between your two _______ options. Earning zero economic profit is n
tigry1 [53]

Answer:

The concept of economic profit ....... <u>alternative</u> two options.

If economic profit is positive .......... <u>Current </u>option.

If economic profit is negative............ <u>Other </u> option

Explanation:

Economic Profit is the excess of revenue associated with an option, over its costs (explicit external & implicit opportunity costs).

Example : Revenue - Direct explicit cost of production - opportunity cost (like interest on money invested, salary of job left foregone).

The concept is used to make decision between two<u> alternative</u> options. Given, zero economic profits imply indifference.

Positive Economic Profit implies - one should choose<u> Current </u>option, as it will make <u>Better off </u>, having more benefit than other option

Negative Economic Profit implies - one should choose <u>Other </u> option, as it wil make better off, having more benefit than the former considered option.

8 0
3 years ago
According to empirical research, in countries where stockholders' rights are strong, firms issue ____ stock than in countries wh
gavmur [86]

According to empirical research, in countries where stockholders' rights are strong, firms issue <u>More </u>stock than in countries where stockholders' rights are weak. Researchers conclude that strong stockholders' rights <u>reduce</u> moral hazard in stock markets.

<u>Explanation</u>

A <u>Moral hazard</u> is said to have occurred when one party (i.e insured Party) increases its exposure to risk  ,because some other party bears the cost of those Risk.It reflects the tendency of a person to take more risk as the consequence of the risk taken has to be beard by some other party

<u>The moral hazard problem is </u><u>less </u><u> severe in bond markets than in stock markets. In addition, moral hazard arises in bond markets when firms issue bonds with high default risk.</u>

<u />

So it is appropriate to say that , in countries where stockholders' rights are strong, firms issue <u>More </u>stock than in countries where stockholders' rights are weak. Researchers conclude that strong stockholders' rights <u>reduce</u> moral hazard in stock markets.

3 0
2 years ago
________ is the task of developing and maintaining an overall company strategy for long-run survival and growth. short-term plan
mr Goodwill [35]
Strategic planning is the task of developing and maintaining an overall company strategy for long-run survival and growth. 

In business, strategic planning is a vital step to succeed long-term. The steps involved in strategic planning define the companies overall goal/mission, direction for the company and how they are going to get there. 
8 0
3 years ago
What is a realtor? What do they do? How much do they get paid?
Nadusha1986 [10]

tomorrow no school tomorrow we can you send me the bm work please let me know what you think I should be able to do it ok to do it ok

8 0
2 years ago
Read 2 more answers
Bennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $70,200 cash to start the bu
Verizon [17]

Answer:

The net income is $94,450

Explanation:

For computing the net income first determine the total assets and total liabilities which is shown below:

For total assets

= cash + account receivable + store & office equipment

= $69,350 + $39,000 + $73,000

= $181,350

For total liabilities

= Account payable + note payable

= $13,300 + $3,400

]= $16,700

Now with the help of an accounting equation, the total stockholder equity is

Total assets = Total liabilities + common stock + net income

$181,350 = $16,700 + $70,200 + net income

So, the net income is $94,450

8 0
3 years ago
Other questions:
  • The company has a target capital structure of 40% debt and 60% equity. Bonds pay 10% coupon (semi-annual payout), mature in 20 y
    11·1 answer
  • Simentec Inc., a tech support company, hasover 150 employees working infive countries. The company allows workers to work from a
    14·1 answer
  • Suppose that Greece and Switzerland both produce oil and shoes. Greece's opportunity cost of producing a pair of shoes is 4 barr
    11·1 answer
  • Late in the current year, Jolsen Company signed a four-year contract with an advertising agency. Under the contract, Jolsen must
    5·1 answer
  • Two investments are made at the same time. The first consists of investing 1480 dollars at a nominal rate of interest of 7.7 per
    6·1 answer
  • All of the following statements regarding a business segment are true except:_______a. A business segment is a part of a company
    9·1 answer
  • A firm’s profit margin is 5 percent, its debt/assets ratio is 56 percent, and its dividend payout ratio is 40 percent.
    10·1 answer
  • Assume the following data for Cable Corporation and Multi-Media Inc.
    14·1 answer
  • What is an emergency fund?
    6·1 answer
  • Which term refers to the interest the Federal Reserve Bank (Fed) charges banks for loans? open‑market sale fractional banking re
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!