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
zalisa [80]
2 years ago
7

Hi-Tek is a young start-up company. No dividends will be paid on the stock over the next 9 years, because the firm needs to plow

back its earnings to fuel growth. The company plans to pay a $6 per share dividend in 10 years (that is, at t = 10) and will increase the dividend by 4 percent per year thereafter. What is the current share price if the required return on this stock is 14 percent?
Business
2 answers:
Elza [17]2 years ago
8 0

Answer:

The price of the stock today is $16.83

Explanation:

The current price per share can be estimated using constant growth model of  the DDM. The price per share can be calculated using the following formula,

P0 = D1 / r - g

To calculate the price today, we use the dividend expected for the next period. Thus, using the dividend that will be paid at t=11 or D11, we can calculate the price of the stock at t=10. We further need to discount this price using the required rate of return for 10 years to calculate the price of the stock today.

P10 = 6 * (1+0.04)  /  (0.14 - 0.04)

P10 = $62.4

The price of the stock today will be,

P0 = 62.4 / (1.14)^10

P0 = $16.83

Andrew [12]2 years ago
6 0

Answer:

Current share price = $18.45

Explanation:

<em>The Dividend Valuation Model is a technique used to value the worth of a stock . According to this model, the value of a stock is the sum of the present values of the future dividends  discounted at the required rate of return.</em>

The share price would be determined using the dividend valuation model as follows:

P = Do×(1+g)/(ke-g)

P- price , Ke- cost of equity, g- growth rate in dividend

P-?  g- 4%, Ke- 14%, D(1+g) = future dividend

Price in year 9 = 6/(0.14-0.04)

                         =$60

Price today

To calculate the price today, the price in year 9 would be discounted at the rate of 14% per annum.

Price now = 60 ×  (1.14)^(-9)

                = $18.45

You might be interested in
ABC, Inc. produces a product that has a variable cost of $2.50 per unit. The company's fixed costs are $30,000. The product is s
Alex777 [14]

Answer:

The amount of sales that will be necessary to earn the desired profit is 16000 units

Explanation:

To get the amount of sales to earn $10000, we make the following equation.

Profit =Sales -variable cost-fixed cost

Profit=10000

Sales=$5.00x

Variable cost= $2.50x

Fixed cost=$30,000

Replacing,

10000=5x-2.5x-30000

10000+30000=2.5x

x=40000/2.5

x=16000

5 0
3 years ago
How can businesses deal with lack of vision and mission​
lesantik [10]
Because it does that so you will need ramen noodles and chalk to draw grass to chickens can grow in the sky.
8 0
3 years ago
For each of the following products, indicate whether you believe demand will be relatively price elastic or relatively price ine
insens350 [35]

Answer:

Note that goods that are considered in general have a broad demand and goods with broad demand are inelastic as there are no substitutes for them. Goods that are specific by nature have narrow demand and have elastic demand because consumers can switch to others if the price is increased slightly.

Hence, Mayonnaise in general, Washing machines and beer have inelastic demand as there are no close substitutes. The remaining three, namely, specific brand of mayonnaise, Chevrolet automobiles and Tesla automobiles have elastic demand as there are substitutes and consumers/users will switch to others if the price is no more favorable.

8 0
3 years ago
A stock sells for $6.99 on December 31, providing the seller with a 6% annual return. What was the price of the stock at the beg
Dimas [21]

Answer:

Correct option is 6.59

Explanation:

Selling price of stock at the end of the year is $6.99. Annual return rate is 6%. Price of stock at the beginning will be present value of stock valued at the end discounted at 6%. Computation is as shown below:

Present\ value\ or\ price\ of\ stock = Selling\ price\left ( \frac{1}{1+i} \right )^{n}

= 6.99\left ( \frac{1}{1+0.06} \right )^{1}

= \frac{6.99}{1.06}

= $6.59

Therefore, Stock's price in the beginning of the year is $6.59.

6 0
2 years ago
The Platinum Platform, in Dubuque, Iowa, sells high-quality, unique bedding that is a real value to upscale homes in the area. N
CaHeK987 [17]

Answer:

focused-differentiation

Explanation:

According to my research on different business strategies, I can say that based on the information provided within the question The Platinum Platform is utilizing a focused-differentiation strategy. This is a strategy that focuses on offering specific products that make the customer believe that the product is vastly superior to it's competitors even though prices are higher. This allows them to gain a competitive advantage in the market. Which is what Platinum Platform is doing by offering it's unique high quality bedding.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

6 0
3 years ago
Read 2 more answers
Other questions:
  • A customer buys $100,000 of a new issue 30 year U.S. Government bond at 80. At maturity, the customer will have:
    6·1 answer
  • Exercise 24-3 Payback period computation; straight-line depreciation LO P1 A machine can be purchased for $140,000 and used for
    10·1 answer
  • 64 divide 8 equals blank what dose blank represesent
    10·2 answers
  • You are considering adding a microbrewery on to one of your firm's existing restaurants. This will entail an increase in invento
    8·1 answer
  • Why isn't overstocking warehouses an effective solution for a problem of low availability? select one:
    9·1 answer
  • Jameson works for Fishy-Mart Corporation, a chain of superstores that sell large quantities of seafood. His job is to locate fut
    11·1 answer
  • A producer using very aggressive promotion to get final consumers to ask intermediaries for a new product has a(n) ________ poli
    6·1 answer
  • The term tax incidence refers to A. the amount of revenue collected by the government from a tax. B. the actual division of the
    6·1 answer
  • Departmental overhead rates are preferred over plantwide rates when: Multiple Choice The plant makes a single product. The produ
    5·1 answer
  • A market economy is not based on _____.
    13·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!