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
Lerok [7]
3 years ago
13

Uncle John's Pipe Company has been experiencing several years of financial difficulty and, thus, has considered maintaining its

dividend payment at $2.50 indefinitely. What is the value of its common stock if the required rate of return is 8.5 percent?
Business
2 answers:
Iteru [2.4K]3 years ago
6 0

Answer:

The value of its common stock is $29.41

Explanation:

As the Dividend payment is for indefinite period of time, This is the perpetuity payment. The value of share can be determined  by calculating the present value of perpetuity payment.

The formula for the present value of perpetuity is as follow

Present value of perpetuity = Cash flow / Required Rate of return

In this case the present value of perpetuity is the value of stock cash flows is The dividend payment.

Value of Stock = Dividend / Required Rate of return

Value of Stock = $2.5 / 8.5%

Value of Stock  = $29.41

Mars2501 [29]3 years ago
6 0

Answer: Value of the common stock = $29.41

Explanation:

GIVEN the following ;

Dividend =$2.50

Rate of return (r) = 8.5% 0.085

The question above requires us to calculate the value of common stock which is equivalent to the present value of perpetuity which is the amount of a fixed income or cash flow an individual earns at regular interval for an INDEFINITE period.

RECALL;

PRESENT VALUE of PERPETUITY IS GIVEN BY:

PV of perpetuity = (Dividend or coupon per period ÷ interest rate(r))

PV of perpetuity = ($2.50 ÷ 0.085)

PV of perpetuity = $29.411

PV of perpetuity = $29.41

You might be interested in
Why do you think compound interest is described by some as a mathematical explosion?
tekilochka [14]

Explanation:

what is the first tink sol do you with your money ? g i v e TRUE ore false You should save first , give second and sens third false

3 0
2 years ago
In a capitalist system, prices are controlled by A. the law of supply and demand. B. the Federal Reserve Board. C. the consumer
GrogVix [38]
A) the law of supply


i am in a business class about to go to college to major in business :)
3 0
3 years ago
The top management at Vermilion Inc. realized that there were some technical defects in the company's new manufacturing plant th
harkovskaia [24]

Answer: (C) Controlling

Explanation:

 The controlling is one of the type of management function that helps in managing the various types of organizational function and also it helps in achieve the desirable goals.

It basically take various types of corrective actions for effectively managing the resources and also helps in improving the performance of the company.

According to the given question, the controlling is one of the management function that efficiently illustrating the given scenario.

In the vermilion inc, the top management of the company realized that at the time of construction of the plant shows some technical defects and the technical specialists of an organization try to resolve the given issue.

Therefore, The given process is known as the controlling management function.

4 0
3 years ago
All of the following are indicators that the vendor is acting as an agent instead of as a​ principal, except: A. The other party
LenaWriter [7]

Answer:

The correct answer is  B. The vendor has latitude in establishing prices for the other​ party's goods or services.          

Explanation:

In an ideal scenario, both sellers and buyers should agree on the price and conditions of a product, in order to avoid speculation and subsequent conflicts. In the event that a seller is the one who has the freedom to decide the conditions such as price or distribution, he is acting as a commercial agent, since he is autonomously deciding on aspects that should correspond to the buyer as the main agent.

4 0
3 years ago
The _____________ serves almost as part of the elaborate scenery, sometimes standing perfectly still in a pose for minutes at a
k0ka [10]
Hey You!

The Corps serves almost as part of the elaborate scenery, sometimes standing perfectly still in a pose for minutes at a time while the main dancers dance downstage.
6 0
3 years ago
Other questions:
  • You are ready to buy a house, and you have $20,000 for a down payment and closing costs. Closing costs are estimated to be 4% of
    9·1 answer
  • You're responsible for managing your company's social media accounts. your colleague tells you about how a lot of businesses are
    11·1 answer
  • Personal possession of currency is prohibited in U.S. prisons, although, in practice, prisoners still exchange goods and service
    14·1 answer
  • There are advantages to doing business with just one vendor, and you should always stick to just one if you can
    15·1 answer
  • Noterman Company has credit sales of $600,000 in January. Past experience suggests that 40% is collected in the month of sale, 5
    6·1 answer
  • Oriole Company bought equipment for $290000 on January 1, 2021. Oriole estimated the useful life to be 5 years with no salvage v
    10·2 answers
  • Each scenario below gives some information about price elasticity of demand for a firm. Use this information to answer the quest
    15·1 answer
  • Volleyball helps people reach their fitness goals by __________. A. using teamwork to win B. improving balance and agility C. im
    13·2 answers
  • You are planning to save for retirement over the next 25 years. To do this, you will invest $1,000 a month in a stock account an
    5·1 answer
  • You are a junior in college. You sent your resume to a half-dozen companies hoping to get a summer internship. Two weeks ago XYZ
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!