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
strojnjashka [21]
2 years ago
11

ABC Corp. has just paid a dividend of $0.26. ABC has an annual required return of 12%.

Business
1 answer:
Elis [28]2 years ago
8 0

Answer:

a. If dividends are annual and expected to be constant, what is the intrinsic value (fair price) of ABC stock?

P₀ = $0.26 / 12% = $2.16667 = $2.17

b. What is ABC's dividend yield?

$0.26 / $2.17 = 12%

c. From now on, assume that the dividend of 0.26 was a quarterly dividend. What is the quarterly discount rate?

12% / 4 = 3%

d. What is the intrinsic value if dividends are constant and quarterly?

P₀ = $0.26 / 3% = $8.66667 = $8.67

e. We now think that dividends will grow by 0.3% from quarter to quarter. The firm just paid the quarterly dividend of 0.26. What is the intrinsic value of ABC stock?

P₀ = ($0.26 x 1.003) / (3% - 0.3%) = $9.6585 = $9.66

f. A different analyst thinks that ABC's dividends will grow by 5% for the next 4 quarters, and then grow by 0.3% thereafter. What is the intrinsic value?

Div₀ = $0.26

Div₁ = $0.273

Div₂ = $0.287

Div₃ = $0.301

Div₄ = $0.316

Div₅ = $0.317

terminal value in 4 quarters = $0.317 / (3% - 0.3%) = $11.74

P₀ = $0.273/1.03 + $0.287/1.03² + $0.301/1.03³ + $0.316/1.03⁴ + $11.74/1.03⁴ = $0.265 + $0.271 + $0.275 + $0.281 + $10.43 = $11.522  

You might be interested in
projectized organizations are especially effective at helping team members to maintain their discipline-specific competencies
Svetlanka [38]

Projectized organizations are especially effective at helping team members to maintain their discipline-specific competencies.

This statement is False.

A Projectized organization works by means of arranging activities into portfolios or applications and executing them via projects. In these kinds of systems, the mission supervisor is the final authority over the venture they are coping with. The team that is operating on the task reviews entirely to them.

Benefits of a Projectized Organizational shape the project team contributors at once record to the assignment supervisor which enables selection making quicker. sturdy conversation lines may be established by a few of the project team participants. group members work in dynamic and adaptive surroundings.

Learn more about Projectized Organizational here: brainly.com/question/13945253

#SPJ4

6 0
1 year ago
Lasch Co. recorded a right-of-use asset of... I. Lasch Co. recorded a right-of-use asset of $200,000 in a 10-year operating leas
svet-max [94.6K]

Answer:

187, 450.00

Explanation:

Cost of the asset : $ 200,000.00

Interest rate at 10 %

Payment per year = 32,550.00

First year total amount due = 10% plus asset cost

= ($200,000x 10/100)= 200,000

=$20,000+200 000

=$220,000.00

After deduction = $220,000- 32, 550

   =$ 187, 450.00

4 0
3 years ago
Loews corporation, a conglomerate with 15 billion usd in revenues, competes across several industries including oil and gas, tob
Dvinal [7]
The statement above is FALSE.
Loews conglomeration is into many businesses including hotels, insurance, watches, oil, gas, tobacco, etc. The diversification strategy of the company is to buy up firms that are in financial mess, turn them into profitable ventures and then sell them at a premium. They also diversified by investing into new business fields.  
7 0
3 years ago
The owner has been considering ways to increase the sales volume. The owner thinks that 10 comma 000 pizzas could be sold per mo
almond37 [142]

Answer:

Instructions are listed below

Explanation:

Giving the following information:

The owner thinks that 10,000 pizzas could be sold per month by cutting the selling price per pizza from $ 5.50 a pizza to $ 5.00.

Total revenues – Total costs = Monthly profit 5,000 pizzas 13750 – 8000 =

I will assume that at $5.50 the total sales in units are 5000. And that the variable cost per unit is $2.75 ($13750/5000) and fixed cost are $8000

Actual profit= (5000*5.5- 5000*2.75) - 8000= $5750

New price profit= (10000*5 - 10000*2.75) - 8000= $14500

7 0
2 years ago
Firms that take voluntary actions to address the ethical, social, and environmental impacts of its business operations are invol
vampirchik [111]
Firms that take voluntary actions to address the ethical, social, and environmental impacts of its business operations are involved in a Corporate Social Responsibility. Hope this helps. <span />
8 0
2 years ago
Other questions:
  • Since the requirements for privacy reach across the organization, the privacy specialist works with appropriate ____ to ensure t
    5·1 answer
  • In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $20,000 and the i
    5·1 answer
  • If the reserve ratio is 10%, and banks do not hold excess reserves, when the Fed purchases $10 million of government bonds, bank
    5·1 answer
  • S10-5 (book/static) On February 28​, 2017​, Rural Tech Support purchased a copy machine for $ 53 comma 400. Rural Tech Support e
    12·1 answer
  • Which of the following is described as an event that a company hosts to thank its loyal​ customers?
    13·1 answer
  • What is meeting the deductible?
    6·1 answer
  • Financial statements are inexorably moving to a model where all assets and liabilities will be measured on the basis of fair val
    12·1 answer
  • 1. The payment made each period on an amortized loan is constant, and it consists of some interest and some principal.
    12·1 answer
  • Nicholas is the production manager for a manufacturing firm. He has two supervisors who are experiencing conflict with each othe
    13·1 answer
  • PLEASE HELP!!!!!!!!!!
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!