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balandron [24]
3 years ago
10

You expect that IBM will have earnings per share of $2.50 for the coming year. IBM plans to retain all of its earnings for years

1-3. For the subsequent two years (years 4 and 5), the firm plans on retaining 40% of its earnings. It will then retain only 10% of its earnings from that point forward. Retained earnings will be invested in projects with an expected return of 15% per year. If IBM's equity cost of capital is 12%, then what is the the price of a share of IBM's stock

Business
1 answer:
Lubov Fominskaja [6]3 years ago
7 0

Answer:

what is the the price of a share of IBM's stock?

Price of a share of IBM's stock = $8.90 per share

Explanation:

<u>Calculation of the price of a share of IBM's stock</u>      

<em>Price of a share of IBM's stock = Sum of Present values of all future dividends discounted at cost of capital i.e.12%</em>

<u>Working</u>          

Per Year Dividend from 3rd Year on-wards = Earnings per share x (1 - retention %) = $2.5 x (1 - 0.40) = $1.50  

Value of perpetual dividend = Dividend payable / equity cost of capital = $1.5 / 12% = $12.50

Calculations are attached:

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The three common types of checking accounts are basic, interest-bearing, and lifeline?
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Answer:

True

Explanation:

Quizlet: Name three common types of checking account? basic checking account, interest-banking checking account, and Lifeline checking accounts.

3 0
2 years ago
Shaq and Kobe are parties to a business contract containing a binding arbitration clause. A dispute between Shaq and Kobe is sub
sveta [45]

Most likely, Shaq will ask that the court overturn the award based on the acceptance of the bribe by Pat.

Option - b

<u>Explanation: </u>

Arbitration is a method to solve quarrels outside the court. The quarrel will be decided by the arbitral tribunal which gives the arbitration award. This award is lawfully compulsory from both the parties and enforceable in the courts.

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7 0
2 years ago
Wilma has a $25,000 certificate of deposit (CD) at the local bank. The interest on this certificate, $1,000, was credited to her
jasenka [17]

Answer:

A. Wilma must include the $1,000 of interest in her income this year.

Explanation:

the interest is taxed when is being credited to the account and this is why Wilma must include it  in her income for this year.

7 0
3 years ago
1. Determine whether the activity is either:
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8 0
2 years ago
Park Place Company reported cost of goods sold of $140,000 for the year 2020. Park Place also reported the following amounts on
Paul [167]

Answer:

the cash paid to supplier is $143,000

Explanation:

The computation of the cash paid to the supplier is given below;

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6 0
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