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
Gennadij [26K]
3 years ago
14

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next three years, with the growth

rate falling off to a constant 8 percent thereafter. If the required return is 11 percent, and the company just paid a dividend of $1.45, what is the current share price?
Business
1 answer:
Grace [21]3 years ago
4 0

Answer:

current share price is $71.05

Explanation:

given data

grow at a rate = 20 percent

time = 3 year

growth rate falling off = 8 percent

dividend = $1.45

solution

we get here price of the stock in Year 3 that is 1 year before the constant dividend growth that is

P(3) = D(3) × (1 + g) ÷ (R - g)  .............1

P(3) = D0 (1 + g1)³ × (1 + g2) ÷ (R - g)

P(3) = \frac{1.45\times 1.20^3 \times 1.08}{0.11-0.08}

P(3) = $90.206  

and

then price of the stock today is present value of first three dividends  + present value of the Year 3 stock price

so price of the stock today is

P(0) = \frac{1.45(1.20) }{1.11} + \frac{1.45(1.20)^2}{1.11^2} +\frac{1.45(1.20)63}{1.11^3} +\frac{90.2016}{1.11^3}    

P(0) = $71.05

You might be interested in
STATEMENT OF STOCKHOLDERS’ EQUITY In its most recent financial statements, Newhouse Inc. reported $50 million of net income and
gizmo_the_mogwai [7]

Answer:

The Company paid usd 2  per share.

Explanation:

Initial Retained Earnings: $ 780 mill.

Current Net Income :       $ 50  mill.

=================================

Subtotal :                          $ 830 mill.

Actual Retained Earnings  :  $ 810 mill.

The difference of $ 20 mill. was the dividends paid to shareholders, if were 10 million of share outstanding, it means usd 2/Share.

5 0
3 years ago
"The economy is doing well when the level of real GDP<br> is at Potential GDP"<br> True<br> O False
Damm [24]
The answer is Trueeeee
8 0
3 years ago
If a cost estimate indicates that a residential design is significantly over budget, what changes would you consider to reduce t
kogti [31]
<h3><u>Changes considered to reduce the cost of the project: </u></h3>

Cost Estimates of a Residential Design have the following elements:

1) Quantity Takeoff

2) Labor Hours

3) Labor Rates

4) Material Prices

5) Equipment Costs

6) Subcontractor Quotes

7) Indirect Costs

8) Profit Margin

Quantity Takeoff is the very basic element required in Residential Building. Labor hours and rates depends on the location, work difficulty, market value, and other extrinsic factors. Material prices and Subcontractor Quotes again depends on location, supply and demand. Equipment Costs depends on the location, place of purchase, transportation cost, size of equipment, etc. Indirect costs are overheads for labor and contractors.

As we can check the above elements, we cannot change Quantity takeoff, as no one wants to compromise in the quality. However, we can try to slightly negotiate with Labor rates and Subcontractor Quotes. Again, as mentioned the budget is significantly high, so we need to work on reducing 2 costs, which are Equipment Costs and Material Prices.

6 0
3 years ago
Prior to entering the Eastern European markets, Procter &amp; Gamble assessed the strengths and weaknesses of possible competito
Neporo4naja [7]

Answer

B. Analyzing the external environment

Explanation:

The action of Procter and gamble can be classified as analyzing the external environment.

The external environment of a business are those factors outside the business organisation that is capable of influencing the decision and actions.  The external environment factors includes economic factors, competitors, social - cultural factors etc.

The action of Procter and gamble of assessing the strength and weakness of his competitors prior to its entrance into the Eastern European market will assist the firm to identify the opportunities that it can leverage on in terms of the weakness of its competitors  and  and how well it can best improve its own services in other to match or surpass the strength displayed by its competitors

7 0
3 years ago
The Guitar Shoppe reports the following sales forecast: August, $110,000; September, $190,000. Total sales includes 30% cash sal
Snezhnost [94]

Answer:

The correct answer is $117,500

Explanation:

According to the scenario, the given data are as follows:

Sales for august = $110,000

Sales for September = $190,000

So, we can calculate the September cash receipts by using following formula:

Cash receipt from August = $110,000 × 55% = $60,500

Cash receipt from September = $190,000 × 30% = $57,000

Total cash receipt for September = Cash receipt from August + Cash receipt from September

= $60,500 + $57,000

= $117,500

4 0
4 years ago
Other questions:
  • . How does the deforestation of rain forests impact global markets?. . . Global markets dictate the economy of developing countr
    9·2 answers
  • Grahanna publishing produces learning materials for middle​ school, high​ school, college, and professional certification course
    13·1 answer
  • Coach Bjourn Toulouse led the Big Red Herrings to several disappointing football seasons. Only better recruiting will return the
    14·1 answer
  • In order for tqm to be successful, it is essential that most of the organization be _________.
    9·1 answer
  • If the rate of interest increases 1 percent, what will be the bond’s new price
    12·1 answer
  • A property owner agrees to pay a broker an open-ended commission as the difference between the sale price and a net amount, prov
    8·1 answer
  • If 16,000 units of materials enter production during the first year of operations, 12,000 of the units are finished, and 4,000 a
    9·1 answer
  • Does anyone else like tyler, the creator or is it just me ..?
    14·1 answer
  • Sheridan Company reported the following year-end information: Beginning work in process inventory$1080000 Beginning raw material
    13·1 answer
  • Livingston Co. uses process costing to account for the production of elastic bands. Direct materials are added at the beginning
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!