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
viktelen [127]
3 years ago
14

Todd Mountain Development Corporation is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow a

t the rate of 10% per year. The risk-free rate of return is 8%, and the expected return on the market portfolio is 18%. The stock of Todd Mountain Development Corporation has a beta of 0.60. Using the constant-growth DDM, the intrinsic value of the stock is _________.
Business
1 answer:
PtichkaEL [24]3 years ago
8 0

Answer:

$75

Explanation:

As per the data given in the question,

Ke = risk free rate of return + beta×(market portfolio - risk free rate of return)

= 8% + 0.60 × (18% - 8%)

= 8% + 6%

= 14%

= 0.14

Now using the constant-growth DDM model :

Intrinsic value of the stock = Dividend ÷ (Ke - expected growing rate)

= $3 ÷ (0.14-0.10)

= $75

Hence, Intrinsic value of the stock is $75.

You might be interested in
Lucky started a new business last year. Since it was the first year of operation, the business purchased $10,000 in machinery an
Jet001 [13]

Answer:

The answer is: A) The new machinery can be depreciated using the same method or different method than the previously purchased machinery

Explanation:

Their is no rule that requires a business to always use the same depreciation method for the assets they purchase.

The most common depreciation methods include:

  • Straight-line.
  • Double declining balance.
  • Units of production.
  • Sum of years digits.

Depending on the asset a business may consider one depreciation method that better suits it, and another depreciation method for their other assets.

6 0
3 years ago
Steven's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are al
inna [77]

Answer:

From maintenance to department B will be allocated 85,333 dollars

Explanation:

We distribute maintenance over personnel and operating and then,

we distributed the accumulated in personnel over the operating department:

\left[\begin{array}{cccccc}&Maintenance&Personnel&Dep A&Deb B\\$maintenance-hours&&800&960&640\\$employes&&&160&480\\$Direct \: Cost&320,000&80,000&160,000&240,000\\$Allocate A&-320,000&106,667&128,000&85,333\\$Subtotal&&186,667&288,000&325,333\\$Allocate J&&-186,667&46,667&140,000\\$Total&&&334,667&465,333\\\end{array}\right]

<em><u>For the given question it would be:</u></em>

total maintenance-hours: 800  + 960 + 640 = 2,400

<u>allocation of maintenance:</u>

320,000 x   640/2400 = 85,333

4 0
3 years ago
Getting a credit card math quiz question 3 of 5: you have a balance of $4,000 on your credit card with a 12% interest rate (1% p
Yuliya22 [10]
I was stuck on the same question. When I find out I’ll tell you immediately!!!
5 0
3 years ago
Read 2 more answers
Apple Inc. is the number one online music retailer through its iTunes music store. Apple sells iTunes gift cards in $15, $25, an
trapecia [35]

Answer:

cash             20,000,000 debit

     unearned revenue        20,000,000 credit

Explanation:

Record the advance collection of $20 million for iTunes gift card.

When a gift card is sold, Apple Inc assume the obligation of latter provide iTunes in the near future or do  cash reimbursement therefore; this isn't revenue. It is a liability. Apple will generate revenue when the gift ard are redeem not at sale.

7 0
3 years ago
Company managers connect values to the chosen strategic vision by combining the company's values and mission/business purpose in
lakkis [162]

Answer:

The answer would be affirmative

Explanation:

The strategic vision of a company must always include values, mission, vision and these must undoubtedly go in the same direction to achieve the goals. It can have changes or adjustments but always be synchronized with the ideals of the entrepreneur.

5 0
2 years ago
Other questions:
  • This morning, you purchased a stock that will pay an annual dividend of $1.90 per share next year. You require a 12 percent rate
    11·1 answer
  • An algebra class has 20 students and 20 desks. for the sake of variety, students change the seating arrangement each day. how ma
    5·1 answer
  • Shane's Catering began with cash of $10,000. Shane then bought supplies for $2,300 on account. Separately, Shane paid $7,500 for
    7·1 answer
  • Coronado Industries incurred the following costs for 68000 units: Variable costs $408000 Fixed costs 392000 Coronadohas received
    5·1 answer
  • Suppose that Greece and Switzerland both produce beer and olives. Greece's opportunity cost of producing a crate of olives is 5
    9·1 answer
  • The debit side of an account
    11·1 answer
  • Why should an entrepreneur do a feasibility study for starting a new venture
    11·1 answer
  • whether the economy is in a recession is illustrated in the ad/as model by how close the _____________________ is to the potenti
    14·1 answer
  • Global company holds a portfolio of equity securities. the company intends to sell the securities during the next accounting per
    13·1 answer
  • If the price of basketballs goes up from $7.99 to $14.99, what can be expected from suppliers of basketballs as a result?
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!