Answer:
D1 = $3.50
D2 = $3.50
D3 = $3.50
Ke = 10% = 0.1
Po = <u>D1</u> + <u>D2</u> + <u>D3
</u>
(1+ke) (1+ke)2 (1+ke)3
Po = <u>$3.50</u> + <u>$3.50</u> + <u>$3.50
</u>
(1+0.1) (1+0.1)2 (1+0.1)3
Po = $3.18 + $2.89 + $2.63
Po = $8.70
None of the above
Explanation:
In this scenario, we need to discount the dividend in each year by the required at rate of return of 10%. The aggregate of the price obtained as a result of discounting in year 1 to year 3 gives the current market price.
the answer is false, hope this helps
Answer:
Explanation:
Given:
Excess cash = $218,500
Assets = $897,309
Equity = $547,200
outstanding shares of stock = 40,000
Net income = $59,800.
Repurchase program = 15% of excess cash
Book value per share (price per share) = equity/number of shares
= $547200/40000
= $13.68 per share
Total cost of repurchase program = percentage of excess cash used × value of excess cash
= 15/100 × 218500
= $32775
Total number of shares bought in repurchase program = total cost of the repurchase program/price per share
= $32775/$13.68
= 2395.8 shares
= 2395 shares
