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
kherson [118]
3 years ago
5

A stock is expected to pay a dividend of $3 next year. The dividend will grow at a rate of 5% for 2 years, and will then grow at

a rate of 2% from that point on. If the required rate of return is 6%, what is the stock’s value today?
Business
1 answer:
Dima020 [189]3 years ago
7 0

Answer:

The pric eof the stock today us $77.12

Explanation:

The two stage dividend growth model of DDM will be used to calculate the price of the stock today. The formula for two stage growth model is:

Price today = D1 / (1+r) + D2 / (1+r)^2 + ... + [(Dn / r - g) / (1+r)^n]

Price today = 3 / (1+0.06) + + 3 * (1+0.05) / (1+0.06)^2 + [(3 * (1+0.05) * (1+0.02) / 0.06 - 0.02)  /  (1+0.06)^2]

Price today = $77.12

You might be interested in
Gary, a new salesperson for a reputed cellphone manufacturer, meets the owner of a transport company that employs 50,000 people
qaws [65]

Answer:

Option B. It is unrealistic

Explanation:

The reason is that the people have different likes which means we will never see 100 percent acceptance from the customers which might in the way of rejecting the offer of Gary. So the assumption that 50,000 cab drivers will purchase its product is truly optimistic which in other words is unrealistic assumption. So the option B is correct.

Option A is incorrect because the assumption is less qualitative as it doesn't relies on realistic assumption.

The cab drivers sales are relevant here but the sales assumption was unrealistic (Highly optimistic assumption) so the option C and D are incorrect.

Option E is also incorrect because the sales to cab drivers can be measure by initially directly selling 1000 cell phone to 1000 cab drivers which will give an actual idea of sales units expected, which means it is measurable.

6 0
3 years ago
1. You’ve been hired by Nielsen Company to study the market for potatoes. Demand in the potato market is characterized by the de
icang [17]

Answer:

P = MR = 1

Explanation:

The demand function is q = 25 - 12p.

The  total income is the price of potatoes multiplied by the quantities of potato --> P * Q

p*q = p*(25-12p)

p*q = 25p - 12p^2

the first derivative of the previous equation is the marginal revenue. In perfect competition the Price = Marginal revenue.

First derivative of total income ---> 25-24p

And MR = P

25-24p=p

25=25p

<h2>p=1</h2>

8 0
3 years ago
A first saving account pays 5% compounded annually. A second saving account pays 5% compounded continuously. Which of the two in
Marysya12 [62]
The account that’s compounded continuously is the better investment long-term because you accrue interest on top of interest on a daily basis which grows exponentially.
3 0
3 years ago
A fixed amount of pay for working a week or a month is a(n) ___ .
laila [671]

Answer: it is called a salary

Explanation:

5 0
3 years ago
Read 2 more answers
The trial balance of ABC Co. does not balance. АВС CO. TRIAL BALANCE JUNE 30, 2019 Debit Credit Cash 0 5740 Accounts Receivable
Vika [28.1K]

Answer:

ill do it of you make it more readable

Explanation:

4 0
3 years ago
Other questions:
  • Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1
    7·1 answer
  • You put up $40 at the beginning of the year for an investment. The value of the investment grows 5% and you earn a dividend of $
    14·1 answer
  • Suppose that Emmett impersonates a famous clown. He goes into an advertising agency and convinces the manager to issue a check t
    15·1 answer
  • In spending all his income on beer and pizza, Fred finds that the marginal utility of the last pizza he consumed is 8, and the m
    8·1 answer
  • weighted average method in its process costing system. Units % complete for Conversion Beginning work in process inventory 5,000
    13·1 answer
  • On the first day of class at a new university you made judgments about the quality of the class before the professor had entered
    6·1 answer
  • Information related to Tamarisk, Inc. is presented below. 1. On April 5, purchased merchandise on account from Culver Company fo
    13·1 answer
  • g A decrease in aggregate demand will cause prices to fall according to classical economists, and unemployment to increase accor
    10·1 answer
  • Jul. 1 Yang contributed $68,000 cash to the business in exchange for common stock.
    12·1 answer
  • The following data have been recorded for the production of Product A-11 in the current period. Direct materials cost was $2,079
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!