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
melamori03 [73]
3 years ago
14

Burton Corp. is growing quickly. Dividends are expected to grow at a rate of 28 percent for the next three years, with the growt

h rate falling off to a constant 6.4 percent thereafter. If the required return is 16 percent and the company just paid a dividend of $2.95, what is the current share price
Business
1 answer:
lana [24]3 years ago
3 0

Answer:

The current share price is $54.74.

Explanation:

The current share price is the present value of the Year 3 share price plus the present value of the first three dividends.

We first find the Year 3 share price, when the dividend growth becomes constant, using the formula:

P₃ = D₀ (1 + g₁)³ (1 + g₂) / (R - g₂)

P₃ = 2.95 (1 + 0.28)³ (1 + 0.064) / (0.16 - 0.064)

P₃ = 6.5825 / 0.096

P₃ = 68.568

Next, we find the present of the dividends received in the first three years plus the present value of the Year 3 stock price calculated above.

P₀ = [2.95(1.28) / 1.16] + [2.95(1.28)² / (1.16)²] + [2.95(1.28)³ / (1.16)³] + [68.568 / (1.16)³]

P₀ = $54.74

You might be interested in
The basketball season is about to start, and the owners of the Red Lions team want to advertise that fact in their home metropol
enot [183]

Answer:

$96.47

Explanation:

The Cost per thousand (CPM)  refers to the cost of a media used in reaching 1,000 members of an audience. The M in CPM is the Roman numeral for 1,000.

The formula for cost per thousand (CPM) is:

CPM = (Cost of 1 Unit of a Media Program) ÷ (Size of Media Program's Audience) x 1,000

Cost of 1 Unit of a Media Program (Cost of the ad) = $82,000

Size of Media Program's Audience(Readership of Metro News)= 850,000

Therefore:

CPM = (82000 ÷ 850000) X 1000

        =$96.47

6 0
4 years ago
The expense recognition (matching) principle requires that expenses (expenses/assets/liabilities) be recorded in the same accoun
Tju [1.3M]

Answer:

Expenses ; revenues ; adjusting

Explanation:

According to the expense recognition or matching principle, the expenses that are incurred in a particular period should be matched with the revenues that are earned in that particular period.

This principle major part is of the adjustments so that the adjustment entries are passed so that the financial statements represents the true and fair view to the users of the accounting information

8 0
3 years ago
If output is above its natural rate, then according to sticky-wage theory_____________.
Serga [27]

Answer:

Option A

Explanation:

workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate  supply curve left.

7 0
3 years ago
You are following the ____ strategy if you are concentrating on serving a particular segment of customers better.
Anastasy [175]

Target marketing happens in a company first divides the market into segments and then decides which segment is most likely to buy their product. This strategy would then cause the company to concentrating on serving a particular segment of customers better.

5 0
3 years ago
Read 2 more answers
#GOTEEM
Svet_ta [14]

Answer:

What does that mean?

3 0
3 years ago
Read 2 more answers
Other questions:
  • Van and Amy are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of barley and alfalfa each f
    14·1 answer
  • A few years ago, Michael purchased a home for $380,000. Today the home is worth $336,000. His remaining mortgage balance is $142
    10·1 answer
  • Today, _______________ dominate their supply chains.
    7·1 answer
  • What's the main attraction patients have to online pharmacies?
    10·2 answers
  • Which of the following is an instance of stereotyping in advertising?
    9·2 answers
  • The Ethics Review Board at XYZ College is composed of students who were elected by the student body. When a student is charged w
    8·1 answer
  • How much must you deposit in an account today so that you have a balance of $ 23,408 at the end of 11 years if interest on the a
    15·1 answer
  • On September 1, Ziegler Corporation had 57,000 shares of $5 par value common stock, and $171,000 of retained earnings. On that d
    8·1 answer
  • After issuing its financial statements, a company discovered that its beginning inventory was overstated by $150,000. Its tax ra
    10·1 answer
  • When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold, the tax has.
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!