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
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

You might be interested in
An increase in the ability to produce goods and services over time.
UNO [17]

Answer:

<em><u>Economic Growth</u></em>

Explanation:

<em>Economic Growth</em><em>-</em><em> </em><em>an increase in an economy's production capacity or potential GDP</em><em>.</em><em> </em><em>T</em><em>he </em><em>rate </em><em>of </em><em>economic </em><em>growth</em><em> </em><em>is </em><em>the </em><em>key </em><em>determinant </em><em>of.</em><em> </em><em>changes</em><em> </em><em>in </em><em>a </em><em>society's </em><em>standard</em><em> </em><em>of </em><em>living </em><em>–</em><em> </em><em>which </em><em>a </em><em>commonly</em><em> </em><em>measured </em><em>using </em><em>real</em><em> </em><em>GDP </em><em>per </em><em>Capita</em><em>.</em>

3 0
3 years ago
Other things equal, if the national incomes of the major trading partners of the United States were to rise, the U.S. Question 3
andrezito [222]

Answer:

D. Aggregate demand curve would shift to the right

3 0
3 years ago
A hoverboard is a popular battery-operated motorized device that is similar to a skateboard. hoverboard owners have suffered num
Sveta_85 [38]
If in fact, the salesperson did knowingly and willingly, after being asked to sell you a "model...that is safe to charge indoors", sold you a hoverboard which
catches afire while it is being charged
inside a building of some kind, to my knowledge, this most assuredly does breach the implied warranty of fitness for a particular purpose, the aforementioned being upheld due to the fact that the product in question was only purchased because the buyer expressed a need for safety indoors to which, it was then "IMPLIED" by the aforementioned salesperson that this peice of merchandise was that which the customer was seeking. "Judgement for the plaintiff in the form of punitive damages and restitution in the amount of such and such, and so on and so forth, etc., etc..." Case Closed!!!



8 0
3 years ago
The given data represent the total compensation for 10 randomly selected CEOs and their​ company's stock performance in 2009. An
jok3333 [9.3K]

Missing Question Data:

As the Question is missing relevant data, I have searched for it online and found a question similar. The data is attached in a picture file. It might be a little different from your actual question but same approach can be used to solve the question.

Answer with Explanation:

For simplicity, we denote the compensations with variable <em>x </em>and the stock return with variable <em>y.</em> Let us first find the mean and standard deviation for both compensation (x) and return (y).

Mean of Compensation (<em>x) </em> will be,

X\;=\;\frac{26.43\;+\;12.03\;+\;19.74\;+\;13.54\;+\;11.97\;+\;11.41\;+\;25.94\;+\;14.46\;+\;17.13\;+\;14.71}{10}

X\; = \;16.737

Mean of Stock Return (y) will be,

Y\;=\;\frac{5.43\;+\;30.89\;+\;31.89\;+\;80.06\;-\;8.22\;+\;2.89\;+\;4.39\;+\;10.95\;+\;4.18\;+\;11.94}{10}

Y\;=\;17.44

Standard Deviation for Compensation (x) is given by,

\sigma _{x}\;=\;\sqrt{\frac{\sum (x_{i}-X)^{2}}{N}}

\sigma _{x}\;=\;\sqrt{\frac{(26.43-16.73)^{2}+(12.03-16.73)^{2}+....+(14.71-16.73)^{2}}{10}}

\sigma _{x}\;=\;5.30

Standard Deviation for Compensation (x) is given by,

\sigma _{y}\;=\;\sqrt{\frac{\sum (y_{i}-Y)^{2}}{N}}

\sigma _{y}\;=\;\sqrt{\frac{(5.43-17.44)^{2}+(30.89-17.44)^{2}+....+(11.94-17.44)^{2}}{10}}

\sigma_{y}\;=\;23.97

To find the predicted stock return, we have to use the equation for of line of regression,

y_{required}\;-\;Y\;=\;z\;*\;\frac{\sigma _{x}}{\sigma _{y}}\;*\;(x_{required}-X)\;.........\;(1)

where,

z\; =\;Correlation\;coefficient\;=\;-0.2426\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;(given)

x_{required}\;=\;Compensation\;of\;\$15\;million\;=\;15

y_{required}\;=\;Stock\;return\;at\;x_{required}

Equation (1) will become,

y_{required}\;-\;17.44\;=\;-0.2426\;*\;\frac{5.30}{23.97}\;*\;(15\;-\;16.73)

y_{required}\;=\;-0.054*\;(-1.73)\;+\;17.44\;

y_{required}\;=\;17.533.

4 0
3 years ago
According to Laszlo Bock, Google believes in hiring the best talent from the start rather than hoping to develop mediocre talent
Harrizon [31]

Answer:

Training

Explanation:

Talent management strategy is a system adopted by Hr to attract , employee and retain efficient employees in order to maximize business performance.

Continuous training and development is a key talent management strategy used by most companies.

Googles strategy of hiring the best talent from the start rather than developing mediocre talent over time focuses more money on employee selection than training

5 0
4 years ago
Other questions:
  • Once April has the photo in her document, she wants to make several changes to it. What DTP feature is the best tool for April t
    14·2 answers
  • The Home Depot Rewards MasterCard and The Home Depot Business Rewards MasterCard allows consumers and business owners earn rewar
    8·1 answer
  • Why is it important to compute real GDP?
    6·1 answer
  • To fund your dream around-the-world vacation, you plan to save $1,175 per year for the next 15 years starting one year from now.
    5·1 answer
  • Cashvestment, a wealth management firm, renders services to various clients such as salaried employees, entrepreneurs, high-net-
    7·1 answer
  • Operating income can differ materially between the results for the weighted-average and FIFO methods when:
    12·2 answers
  • The project manager must quickly establish operational ground rules for how the team will work together. These include planning,
    10·1 answer
  • Australia-based Renewable Energy Ltd. sells a $10 million device that converts manure into energy. One of these devices is capab
    5·2 answers
  • The quantity demanded of Blu-ray players increased 9% when the price of DVDs increased 5%. What is the estimated cross-price ela
    13·1 answer
  • Suppose Carla has $7000 to invest. Which investment yields the greater return over 4 years: 7% compounded quarterly or 6.85% com
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!