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Anvisha [2.4K]
3 years ago
13

You are considering buying shares of stock in the Steel Mill. The forecast for the firm is steady growth over the next decade. T

he firm just paid its annual dividend of $1.42 per share and has plans to increase that amount by 4 percent annually indefinitely. You require a 12.5 percent return on this type of security. What is your estimate of the value of this stock ten years from now?
Business
2 answers:
allsm [11]3 years ago
8 0

Answer:

The stock price will be $25.72 in ten years from now.

Explanation:

The stock price in ten years from now will be equal to the present value of perpetual growth dividend stream from the stock; with the first dividend in the stream is the eleventh year dividend which is calculated as: Dividend in Year 0 x (1+growth rate)^11 = 1.42 x 1.04^11 = $2.186.

So, the stock price will be calculated as:

Stock price = 2.186/ ( 12.5% - 4%) = $25.72.

So, the answer is: The stock price will be $25.72 in ten years from now.

Lena [83]3 years ago
3 0

Answer:

The stock price ten years from now is $25.72

Explanation:

D0 = $1.42

g = 4%

r = 12.5%

V = ?

The growth is 4% annually indefinitely so this is a perpetuity and since we looking for the price of stock ten from now it means that our year zero is year ten and the PV of perpetuity formula is as follows

D1/r - g

Calculate D1 a dividend of $1.42 was just paid so we have to calculate dividend in year eleven and discount it to calculate price value in year ten

1.42 ×1.04^11 =2.1860

substitute in formula

2.1860/0.125-0.04

=$25.717/25.72

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Answer:

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Explanation:

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3 0
3 years ago
If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment ra
fenix001 [56]

If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals 9%.

<h3>What is the unemployment rate?</h3>

The unemployment rate is the percentage of the labour force that is unemployed.

The unemployment rate = (number of unemployed people / total labour force) x 100

Total labour force = 200 million + 20 million = 220 million

(20 / 220) x 100 = 9%

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5 0
2 years ago
Unexpected weather can even have an effect on the business cycle. true or false
gulaghasi [49]
True.................
7 0
3 years ago
Read 2 more answers
In your opinion, is management still relevant as a course of study today? Explain using relevant examples.
alina1380 [7]

Yes, "management" is still relevant as a course of study today.

Management is one of the most relevant course offered by an educational establishment such as a university. The course polishes the skills of student and enlighten them on how to be useful in management of a company.

  • <em>Business Administration</em>, <em>Business Management, Management Studies, Commerce, Hospital Management, Hospitality Management </em>are examples course that falls under the umbrella of Management

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7 0
3 years ago
You purchased GARP stock one year ago at a price of $67.67 per share. Today, you sold your stock and earned a total return of 18
Svetlanka [38]

Answer:

14.48%

Explanation:

The capital gains yield on the investment is increase in share price divided by the initial price paid to acquire the share a year ago.

The total return formula can be used to figure the price the stock was when sold as below:

total return =P1-Po+D/Po

P1 is the current price which is unknown

Po is the initial price of $67.67

total return is 18.79%

D is the dividend of $2.92

0.1879=P1-67.67+2.92/67.67

0.1879*67.67=P1-64.75

12.72=P1-64.75

P1=12.72+64.75

P1=77.47

Capital gains yield=(77.47 -67.67)/67.67=14.48%

7 0
3 years ago
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