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Nezavi [6.7K]
4 years ago
5

Burton Corp. is growing quickly. Dividends are expected to grow at a rate of 32 percent for the next three years, with the growt

h rate falling off to a constant 6.2 percent thereafter. If the required return is 14 percent and the company just paid a dividend of $2.85, what is the current share price?
Business
1 answer:
Nostrana [21]4 years ago
4 0

Answer:

P0 = $71.7850 rounded off to $71.79

Explanation:

The two stage growth model of DDM will be used to calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,

P0 = D0 * (1+g1) / (1+r)  +  D0 * (1+g1)^2 / (1+r)^2  +  ...  +  D0 * (1+g1)^n / (1+r)^n  +  

[(D0 * (1+g1)^n  *  (1+g2) /  (r - g2))  /  (1+r)^n]

Where,

  • g1 is the initial growth rate
  • g2 is the constant growth rate
  • D0 is the dividend paid today or most recently
  • r is the required rate of return

P0 = 2.85 * (1+0.32) / (1+0.14)  +  2.85 * (1+0.32)^2 / (1+0.14)^2  +  

2.85 * (1+0.32)^3 / (1+0.14)^3  +  

[(2.85 * (1+0.32)^3  *  (1+0.062)  / (0.14 - 0.062))  /  (1+0.14)^3]

P0 = $71.7850 rounded off to $71.79

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Answer:

Product A -$5

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Explanation:

Apart from the contribution for products A and B given in the question,the other details are the machine hours required to produce one unit of A and B,which implies that the limited resource is the machine hour provided alongside the contribution

The contribution per unit of limiting factor or resource is computed thus:

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Contribution                                                           $10                          $12

Limiting resource(hour)                                            2                              3

Contribution/resource(contribution/resource)        $5                          $4  

In other words it would be better to give product preference in production since it has a higher contribution per unit of scarce resource                    

8 0
3 years ago
Before a significant risk medical mobile app (MMA) study can commence, what does the sponsor need to do
Minchanka [31]

Based on operational standards, before a significant risk medical mobile app (MMA) study can commence, the sponsor "<u>must have an approved IDE from FDA."</u>

<h3>What are IDE and FDA?</h3>

IDE is the acronym of Investigational Device Exemption. Approval of IDE validates the investigational device to be utilized in medical research to obtain safety and efficacy data.

Similarly, FDA is the acronym of Food and Drug Administration. The responsibility of the FDA is to ensure there is safety and security of human and veterinary commodities, including drugs, biological products, and medical devices, among others.

Hence, in this case, it is concluded that the correct answer is that the sponsor "<u>must have an approved IDE from FDA."</u>

Learn more about the FDA here: brainly.com/question/14164603

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liraira [26]

Answer:

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Explanation:

I only just guessed but I hope this helped u.

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3 years ago
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Sharing of the relevant cost data will enable the competitor to have a good idea of what goes into Aaron production and it's pricing policy which may be use to the advantages of the competitor.

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This is an example of Adverse interest. Adverse here means against the interest of others. This type of interest in mostly found in case of property disputes. Like if a person has illegally occupied someone else's property than his interest in that property will be adverse the interest of the real owner of that property.

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