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
Gnoma [55]
3 years ago
14

Here are data on two stocks, both of which have discount rates of 8%: Stock A Stock B Return on equity 8 % 5 % Earnings per shar

e $ 2.60 $ 1.80 Dividends per share $ 1.30 $ 1.30 a. What are the dividend payout ratios for each firm? (Enter your answers as a percent rounded to 2 decimal places.) b. What are the expected dividend growth rates for each stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) c. What is the proper stock price for each firm? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Business
1 answer:
AfilCa [17]3 years ago
6 0

Answer:

Please sew solution below

Explanation:

a. What are the dividend payout ratios for each firm

Dividend payout ratio = Dividend / EPS

• Payout ratio stock A = $1.30 / $2.6 = 0.5= 50%

• Payout ratio stock B = $1.3 / $1.8 = 0.72222 = 72.22%

b. What are the expected dividend growth rates for each stock.

Growth rate = ROE × (1 - dividend payout ratio)

•Growth rate stock A = 0.08 × (1 - 50%) = 0.04 = 4%

• Growth rate stock B = 0.05 × (1 - 72.22%) = 0.01389 = 1.39%

c. What is the proper stock price for each firm

• Stock A

Price = D1 / (Re - g)

D1= $1.30 * (1 + 0.04)

= 1.352

Stock B

Price = D1 / (Re - g)

D1= $1.30 * (1 + 0.013)

= 1.3169

Therefore,

• Stock A's proper price = $1.352 / (0.08 - 0.04) = $33.8

• Stock B's proper price = $1.3169 / ($0.08 - $0.013) = $19.66

You might be interested in
A hospital revenue bond issue is being underwritten on a negotiated basis. The offering consists of $100,000,000 par value of te
GenaCL600 [577]

Answer:

The syndicate member earns $20.

Explanation:

When bonds are sold directly to the public, the syndicate member earns the total takedown. Total takedown refers to the selling concession plus the additional takedown $22.00 + $20.00 = $42.00.

In this question, it indicated that a selling group was used to find customers. This means that the syndicate member will not earn the total takedown because he has given up his selling concession of $22.00 to the selling group member, leaving the syndicate member to earn only the additional takedown of $20.

3 0
3 years ago
To accurately determine the financial performance of a company, it is necessary to compare the company's performance ________.
ratelena [41]

To accurately determine the financial performance of a company, it is necessary to compare its performance from <u>year to year</u>.

In order to accurately determine the financial performance of a company, financial statements are used in evaluating, which include the balance sheet,  statement of cash flows, and the income statement.

Financial performance indicators are quite necessary as they are quantifiable metrics which are used to measure how well a company is doing. Some companies also hire an outside accounting firm to audit the financial statements.

Hence, it is necessary to compare the financial performance of a company from year to year.

To learn more about financial performance here:

brainly.com/question/17307055

#SPJ4

6 0
1 year ago
When components for a dell laptop computer are produced by a u.s. supplier, this is an example of?
IrinaK [193]

When components for a dell laptop computer are produced by a u.s. supplier, this is an example of onshoring.

A supplier is someone or enterprise that provides a product or service to any other entity. The role of a supplier in an enterprise is to offer products from a manufacturer at an awesome rate to a distributor or store for resale.

In an enterprise, a supplier is someone or an entity that provides top-notch offerings and goods from manufacturers at reasonable costs to shops or distributors for sale. They offer deliverables in the form of raw materials, which the producers later system into market-equipped stop products.

Providers are often known as the first hyperlink in a supply chain, present strictly in a B2B relationship. With the aid of comparison, a seller is a business or man or woman who purchases merchandise from a corporation, then sells them to a person else.

Learn more about suppliers here brainly.com/question/25922327

#SPJ4

8 0
1 year ago
from a company's viewpoint, the existence of an active, liquid, well-organised market in existing shares:
garri49 [273]

From a company's viewpoint, the existence of an active, liquid, well-organized market in existing shares A. facilitates the raising of further capital in the secondary market.

<h3>What is a secondary market?</h3>

A secondary market is a securities market for the exchange of securities and assets among investors rather than with the issuing entities.

The types of secondary markets include:

  • Over-The-Counter Markets
  • Stock Exchanges
  • Auction markets
  • Dealer markets.

<h3>Answer Options:</h3>

A. facilitates the raising of further capital in the secondary market.

B. maintains the share price above the initial issue price.

C. encourages successful primary market issues.

D. is of little or no consequence.

Thus, from a company's viewpoint, the existence of an active, liquid, well-organized market in existing shares A. facilitates the raising of further capital in the secondary market.

Learn more about secondary markets at brainly.com/question/14484986

#SPJ12

4 0
2 years ago
Why is it important to be fiscally responsible?
motikmotik
So you can have food, shelter and help your damily
6 0
2 years ago
Other questions:
  • What are the most important reasons why eCommerce has seen explosive growth in recent years? In your opinion, will this growth i
    8·1 answer
  • The market value of which of the items would be considered double (or multiple) counting in the calculation of GDP? Indicate the
    8·1 answer
  • When serving apple slices, its important to have which of the following ingredients on hand?
    9·2 answers
  • What is another name for intermediaries? Name two types of intermediaries. Name five non-store retailing methods.
    6·1 answer
  • How does NAFTA's elimination of 20% of Mexican tariffs on U.S. cars affect the United States?
    12·1 answer
  • Asking customers to complete a survey once they've purchased a product is part of what step of the product development process?
    14·1 answer
  • ) Suppose that the linear equation for consumption in a hypothetical economy is C = $40 + .8Y. Also suppose that income (Y) is $
    7·1 answer
  • Market Street Grocery carries a complete line of products that appeal to Hispanic customers. Market Street buys cleaning product
    7·1 answer
  • If a contingency in a purchase agreement is not fulfilled despite a good faith effort to fulfill it, the party who benefits from
    9·1 answer
  • According to the religious economy perspective, competition through the existence of of a multitude of religions causes religiou
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!