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Stolb23 [73]
3 years ago
13

Your bank account pays an interest rate of 9 percent. You are considering buying a share of stock in XYZ Corporation for $90. Af

ter 1, 2, and 3 years, it will pay a dividend of $4. You expect to sell the stock after 3 years for $100.Is XYZ a good investment?
Business
1 answer:
dlinn [17]3 years ago
7 0

Answer: It is NOT a good investment.

Explanation:

Your bank account pays an interest of 9% per annum. This can be used as a discount rate to discount the dividends and the final Sales price to the present to see if the present value of Future benefits is more than what the stock is valued at now.

If the Present Value of the future benefits is higher than the cost now, XYZ is a good investment.

$4 are expected every year for 3 years and then on the third year, the stock will be sold for $100.

Discounting therefore gives us,

= (4 / (1 + 9%) ) + (4 / (1 + 9%)^2) + ( 4 / ( 1 + 9%) ^ 3) + ( 100 / ( 1 + 9%) ^ 3)

= 87.34

= $87.34

The Present Value of the future benefits including the future sales price is $87.34 which is less than the current cost of the stock at $90.

XYZ is NOT a good investment.

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Dmitry_Shevchenko [17]
Standardization and innovation play critical roles in the development of goods and services. Standardization allows for a stabilized starting point in which to move forward and develop other goods and services which is related to innovation. Standardization provides stability, a known factor which can be relied upon, whereas innovation is riskier and may not come to be successful endeavor. However, like all risk, that is the payoff for the investment in innovation, for if the innovative good or service can be successfully brought to market, the dividends for a payout can be well worth it.
5 0
4 years ago
What’s the answer cuh
ivann1987 [24]

Answer:

D

Explanation:

i took the paper test

7 0
3 years ago
In early July, Damon Rutton purchased a $70 ticket to the December 15 game of the Sarasota Shippers. Parking for the game was ex
Bingel [31]

Answer:

Sunk cost will be = $70

Explanation:

Sunk Cost refers to the cost for which the amount has been already spent, and cannot be recovered. These are generally incurred and then not regarded for decision making as irrespective of decision being viable or not this cost cannot be avoided.

In the given instance, Damon Rutton Purchased the ticket of $70

This is the only cost which has already been incurred, else other costs of parking and food will only be incurred if he visits the game of Sarasota Shippers.

When he spend some time with his wife sunk cost will be = $70

8 0
3 years ago
If import restrictions remain in effect after an infant industry becomes competitive in the domestic​ market, consumers in this
sertanlavr [38]

Answer: higher than

Explanation: The stockholders of companies in the infant industry gain when they are protected from world competition

-Consumes in that country will therefore pay a price higher than the world price.

8 0
3 years ago
Seven months ago, you purchased 140 shares of Mitchum Trading for $50.07 per share. The stock pays a quarterly dividend of $.17
sesenic [268]

Answer:

The answer is $47.6

Explanation:

Solution

Given that

You bought = 140 shares of  Mitchum Trading for $50.07  per share

The quarterly dividend = $.17

The current price = $51.03

So we find the total dividend income you received which is computed below:

The total dividend received = (0.17 * 2) * 140

=(0.34) * 140

= $47.6

Therefore the total dividend of income that you received is $47.6

4 0
3 years ago
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