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dybincka [34]
2 years ago
7

Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 25 percent for the next three years, with the gro

wth rate falling off to a constant 4.5 percent thereafter. If the required return is 10.5 percent and the company just paid a dividend of $2.85, what is the current share price?
Business
1 answer:
mel-nik [20]2 years ago
3 0

Answer:

The current share price is $82.85

Explanation:

D1 = (2.85*1.25)

    = 3.56

D2 = (3.56*1.25)

     = 4.45

D3 = (4.45*1.25)

     = 5.566

Value after year 3 = (D3*Growth rate)/(Required rate - Growth rate)

                              = (5.566*1.045)/(0.105 - 0.045)

                               = $96.95  

current price = Future dividend and value*Present value of discounting factor  

= 3.56/1.105 + 4.45/1.105^2 +5.566/1.105^3 + $96.95/1.105^3

= $82.85

Therefore, The current share price is $82.85

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Answer:

c. an estimate of a plant asset's value at the end of its useful life

Explanation:

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The treatment of the residual value under the straight-line method or any other method is shown below:

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5 0
3 years ago
During the months of January and February, Hancock Corporation sold goods to three customers. The sequence of events was as foll
hram777 [196]

Answer:

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Explanation:

The computation of the net sales for the two months is shown below:

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The same is to be considered

5 0
3 years ago
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8 0
3 years ago
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7nadin3 [17]

Answer:

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7 0
3 years ago
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Answer:enter into the strategic marketing process

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