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Shalnov [3]
3 years ago
5

Ashley is considering the purchase of a stock that has just paid a dividend of $0.72, today. The dividend is expected to grow at

a rate of 2.8 percent per year and the market requires a return of 10% on assets of similar risks. What is the price that Ashley should pay for this stock?
Business
1 answer:
arlik [135]3 years ago
7 0

Answer:

$10.28

Explanation:

<u>Step 1. Firstly we use the of the The dividend discount model (DDM)</u>

This calculation is: D1 = D0 x (1 + g)

D1 = $0.72 x (1 + 2.8%) = $0.74.

Where

Do = Dividend now

D1 = Dividend in year 1

g = growth

<u>Step 2 Next, using the Gordon Growth Model, </u>

Price per share is found to be D(1) / (r - g)

Price = $0.74 / ( 10% - 2.8%) = $10.28

where:

Do = Dividend now

D1 = Dividend in year 1

g = growth

r = required return

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Doss [256]

Answer:

A. 3.8 YEARS

B YES

C $325.91

Explanation:

Payback period is the amount of time it takes to recover the amount invested in a project from its cumulative cash flows.

payback period = amount invested / cash flows

$1,900 / $500 = 3.8 years

the project should be accepted because the payback period is less than the maximum acceptable year

Net present value is the present value of after tax cash flows from an investment less the amount invested.

NPV can be calculated using a financial calculator

cash flow in year 0 = $-1900

cash flow each year from year 1 to 5 = $500

I = 4%

NPV = $325.91

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

6 0
3 years ago
Typical ____________ data include gender, income and geographic region.
Simora [160]
Typical demographics data include gender, income and geographic region.
4 0
3 years ago
convenient product is the product that is relatively inexpensive item that merits little shopping effort. Is it true or false?​
gayaneshka [121]

Answer: True

Explanation:

A convenient product is the product that is relatively inexpensive item that merits little shopping effort.

A convenient product refers to an inexpensive product which requires a little amount of effort from the consumer to purchase it. Some examples of convenience products include soft drink, bread, coffee.

Therefore, the statement given is true.

8 0
3 years ago
NaviCal Inc., a personal navigation system company, has contracted its manufacturing to a firm in Malaysia for five years. NaviC
tekilochka [14]

Answer:

Direct foreign investment

Explanation:

Foreign direct investment (FDI) is done in the case when the company controls the ownership in the other country of the business entity

Here the foreign company would be directly linked with the day to day operations that done in the other country this means that here not only the contribution of money matters but also the knowledge, skills, capabilities, techonology is also matter

Therefore the above represent the answer

5 0
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jolli1 [7]

Answer:

The correct answer to the following question is option A) satisfy a requirement in addressing a risk .

Explanation:

The reason why management is implementing controls is to mitigate the risk in the newly developed system, that is why management should select that control which primarily mitigate the risk, which have been identified by the management. While designing a control, it would be necessary to consider all the aspects given in the question for a control to be best but in reality it might not be possible.

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