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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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shutvik [7]

Answer:

Fixed Overheads Spending Variance = $5,000 Unfavorable(U).

Fixed Overheads Spending Variance = $20,000  Favorable (F).

Explanation:

Fixed Overheads Spending Variance = Actual Fixed Overheads  - Budgeted Fixed Overheads

                                                              = $305,000 -  $300,000

                                                              = $5,000 Unfavorable(U).

Fixed Overheads Spending Variance = Fixed Overheads at Actual Production  - Budgeted Fixed Overheads

                                                              = ($5.00 × 64,000) - $300,000

                                                              = $320,000 - $300,000

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3 0
3 years ago
You need some money today and the only friend you have that has any is your ‘miserly' friend. He agrees to loan you the money yo
Bingel [31]

Answer:

B. The total interest = $4.35

Explanation:

The first question to answer, is  what is the present value of the annuity of the loan and then based on that the total interest can be calculated.

<h2>Present value of annuity= A x [(1-(1+r)-n)/r]*(1+r) </h2>

Where the A represents Annuity = or $20

The r represents the rate or 1.5%

and the n represents the number of periods which is 6 months

Calculating the value =

= 20 x [(1-1.015^-6)/0.015]*1.015

= 20 x [(1-0.91454219251)/0.015]*1.015

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Now that the loan amount is known, the Total Interest can be calculated as follows

Total Interest= number of payments x monthly payments) - the loan amount (calculated above)

= 20 x 6 -115.65

= 120-115.65

The total interest = $4.35

8 0
3 years ago
How will a drastic fall in the price of necklaces affect the quantity of necklaces that rachel supplies? explain your answer. 12
Eduardwww [97]

Price and quality exist positively correlated.  A drastic fall in the price of a necklace shows a drastic fall in its quality.

<h3>What is price?</h3>

A price exists as the quantity of payment or compensation provided by one group to another in return for goods or services. In some situations, the price of production has various names. If the product exists as a "good" in the commercial exchange, the payment for this product will likely be named its "price".

A positive correlation exists as a connection between two variables that move in tandem—that is, in the same direction. A positive correlation exists when one variable decreases as the other variable declines or one variable increases while the other increases.  A positive correlation indicates that both variables change in the same direction. A negative correlation indicates that the variables change in opposite directions. A zero correlation signifies there's no association between the variables.

Price and quality exist positively correlated. The price of a product stands as a good indicator of its quality. You always have to spend a bit more for the best. The marketing literature has managed the usage of price as a surrogate for quality as a decision-making heuristic. That exists; the higher the price, the higher the quality.

Therefore, a drastic fall in the price of a necklace shows a drastic fall in its quality.

To learn more about positive correlation refer to:

brainly.com/question/17104826

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5 0
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Dahasolnce [82]
I would say this impression, would cause her to act negatively towards her.
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The IPO process involves several entities, such as the issuing company, institutional investors, brokers, lawyers, regulators, r
Masteriza [31]

Answer:

The IPO Process

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