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Nat2105 [25]
3 years ago
7

Which of the following statements is​ FALSE? A. According to the constant dividend growth​ model, the value of the firm depends

on the current dividend​ level, divided by the equity cost of capital plus the grow rate. B. A firm can only pay out its earnings to investors or reinvest their earnings. C. Successful young firms often have high initial earnings growth rates. D. Estimating​ dividends, especially for the distant​ future, is difficult.
Business
1 answer:
Vedmedyk [2.9K]3 years ago
4 0

<u>A. According to the constant dividend growth​ model, the value of the firm depends on the current dividend​ level, divided by the equity cost of capital plus the grow rate.</u>

This is the false statement.

<u>Explanation</u>:

The fair value of stock can be calculated using the dividend growth model. While calculating the value of the stock, the growth of the dividends should be considered either in a stable rate or at a different rate during the period at hand.

The dividend growth model is also known as a <u>valuation model</u> as it is used to achieve the value of the stock.

Equity cost is the cost that the firm owes to the equity investors to compensate the risk of their investment.

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Cash is King!Good cash management is an essential job of the financial manager! You own a small auto sales business called King
fomenos

Answer:

The solution to the given problem is given below.

Explanation:

1. Do you believe that the company needs outside financing?

Yes, Company needs outside finance total $ 40,000 as $25,000 in month of Feb and $15,000 in month of Apr il.

2. What is the minimum line of credit to request from a lender?

Minimum line of credit needed is $40,000

3. Do you think you are a good candidate for the line of credit? Why?

Yes, we are good candidate for line of credit because we can start repayment by May and repay by July and after repayment we will have ending March Cash balance $100,000 .

Detailed calculations are attached with the image.

3 0
3 years ago
Bond P is a premium bond with a coupon rate of 9 percent. Bond D has a coupon rate of 5 percent and is currently selling at a di
Firdavs [7]

Answer:

a) 7% as their market price will adjsut to give the same yield as the market

b) bond P = -10.17

 bonds D  = 10.07

Explanation:

we have to calcualte the price variation of the bonds from now (10 years to maturity) to next year (9 years)

Bond P

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 90.000

time 10

rate 0.07

90 \times \frac{1-(1+0.07)^{-10} }{0.07} = PV\\

PV $632.1223

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   1,000.00

time   10.00

rate  0.07

\frac{1000}{(1 + 0.07)^{10} } = PV  

PV   508.35

PV c $632.1223

PV m  $508.3493

Total $1,140.4716

then, at time = 9

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 90.000

time 9

rate 0.07

90 \times \frac{1-(1+0.07)^{-9} }{0.07} = PV\\

PV $586.3709

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   1,000.00

time   9.00

rate  0.07

\frac{1000}{(1 + 0.07)^{9} } = PV  

PV   543.93

PV c $586.3709

PV m  $543.9337

Total $1,130.3046

Capital loss: 1,130.30 - 1,140.47 = -10.17

We repeat the process for bond D

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 50.000

time 10

rate 0.07

50 \times \frac{1-(1+0.07)^{-10} }{0.07} = PV\\

PV $351.1791

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   1,000.00

time   10.00

rate  0.07

\frac{1000}{(1 + 0.07)^{10} } = PV  

PV   508.35

PV c $351.1791

PV m  $508.3493

Total $859.5284

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 50.000

time 9

rate 0.07

50 \times \frac{1-(1+0.07)^{-9} }{0.07} = PV\\

PV $325.7616

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   1,000.00

time   9.00

rate  0.07

\frac{1000}{(1 + 0.07)^{9} } = PV  

PV   543.93

PV c $325.7616

PV m  $543.9337

Total $869.6954

Capital gain: 869.70 - 859.53 = 10.07

6 0
3 years ago
What kind of business most often risks problems over who will do what kind of work and under what circumstances?
uysha [10]
Es la C tienes mas riesgos por que aquí tu tienes tu propia empresa y por lo tanto mas dinero lo cual atrae a lis delincuentes para hacer secuestros robos asesinatos etc Espero q te sirva
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3 years ago
Which of these is most likely to make you sleepy while you’re reading?
irinina [24]

answer options ? I cant answer without options lol



4 0
3 years ago
In a traditional economy decisions are based largely on
Luden [163]
Custom

Hope this helps ;)
5 0
3 years ago
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