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grin007 [14]
3 years ago
5

Johnson Enterprises intends to make a dividend payment of $3.25 per share next year. After this dividend payment, the firm is co

mmited to raise its dividend by 5.1 percent per year, forever. Assuming you require a return of 15 percent on this investment, how much would you be willing to pay for this stock today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
vladimir1956 [14]3 years ago
6 0

Answer:

I would be willing to pay $ 32.83  for each share of Johnson Enterprises

Explanation:

The price per share= next year dividend/required rate of return-growth rate

next year dividend is $3.25

required rate of return is 15%

dividend growth rate in perpetuity is 5.1%

share price=$3.25/(15%-5.1%)

share price =$3.25/9.9%

share price=$3.25/0.099

share price=$ 32.83  

The share can be sold today for $ 32.83  ,which is the present value of dividends payable in perpetuity(forever)

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SVETLANKA909090 [29]
Answer is 2,000,000 . I need to add a little more sorry for this sentence
3 0
3 years ago
The unique markings and small cuts on the sole of a suspect's shoe are unique because of continued wear and use. these markings
Solnce55 [7]

The answer is: individual characteristics

In forensic, individual characteristics refers to a trail of evidence that could only be made by someone with a specific background or someone who are used to a certain type of behavior.

From markings and cuts and the sole, investigators could predict the general activities that usually done by the owner of the shoe. This would helped them identify the victim and help to unfold what happened to that victim when the crime occurred.

6 0
3 years ago
_____________ are a form of financial instrument through which corporations and governments borrow money from financial investor
makkiz [27]

Answer:

Bonds

Explanation:

Bonds are financial instruments that are used to obtain funding from the bond holders. It is a debt security that is issued by a government or corporation to investors.

When investors buy bonds the funds are used by governments for its operations and various projects. Interest is paid on the bonds.

Bonds can be municipal bonds or corporate bonds.

Unlike shares bonds does not grant the holder an equity or ownership stake in the company, rather it grants a creditor stake.

3 0
3 years ago
Over the next three years, Distant Groves will pay annual dividends of $.65, $.70, and $.75 a share, respectively. After that, d
olganol [36]

Answer:

The share is worth $5.68 today.

Explanation:

The current price of the stock can be calculated using the DDM or dividend discount model. The DDM values the stock based on the present value of the expected future dividends from the stock.

The following is the formula for the price of the stock today,

P0 = D1 / (1+r)  +  D2 / (1+r)^2  + ... +  Dn / (1+r)^n  +  Terminal value / (1+r)^n

The terminal value is the cumulative value of all the future dividends calculated when the dividend growth becomes zero or constant. In case the dividend growth becomes constant, like in this case, the terminal value is calculated as follows,

Terminal value = Dn * (1+g) / r - g

Where,

  • g is the Constant growth rate in dividends

So, the price of this stock today is,

P0 = 0.65 / (1+0.145)  +  0.70 / (1+0.145)^2  +  0.75 / (1+0.145)^3  +  

((0.75 * (1+0.02) / (0.145 - 0.02)) / (1+0.145)^3

P0 = $5.678 rounded off to $5.68

6 0
3 years ago
What does the intersection point of the demand and supply curves mark? The intersection point of the demand and supply curves ma
vladimir2022 [97]

Answer:

The equilibrium point

Explanation:

The equilibrium point is where there is an exact quantity of production output that perfectly satisfies the total demand of the market.

6 0
4 years ago
Read 2 more answers
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