The correct answer is letter C
Answer;
$ 70.07
Explanation:
The price of the stock when the dividends level off at a constant growth rate, we then find the PV of the future stock price, including the PV of all dividends during the super normal growth period. The stock start it constant growth in Year 4, so that we can be able to find the price of the stock in Year 3, which is the year before the constant dividend growth begins as:
P3= D3(1 + g) / (R− g) = D0(1 + g1)3(1 + g2) / (R− g)
P3= $3.40(1.24)3(1.06) / (.14 − .06)
P3= $85.89
Therefore the price of the stock today is the PV of the first three dividends, we then add it with the PV of the Year 3 stock price.
Hence the price of the stock today will be:
P0= $3.40(1.24) / 1.14 + $3.40(1.24)2/ 1.142+ $3.40(1.24)3/ 1.143+ $85.89 / 1.143
P0= $70.07
The current shape price is $70.07
The United States Federal Reserve System controls the money supply and also monetary policy in the United States including the buying of selling of U.S. Treasury bonds to influence the money supply.
Answer:
Prices have gone down.
Explanation:
Technology allows the companies to produce more better quality computers for less money. The supply is going up and production costs are going down so the prices will also go down.