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Svetach [21]
3 years ago
7

Over the next three years, Distant Groves wl pay annual dividends of $.65, S.70, and $.75 a share, respectively. After that, div

idends are projected to Increase by 2 percent per year. What is one share of this stock worth today at a required return of 14.5 percent?
a) $5.49
b) $5.94
c) $5.68
d) $5.55
e) $5.86
Business
1 answer:
hichkok12 [17]3 years ago
5 0

Answer:

c) $5.68

Explanation:

The worth of this stock today is the present value of the future dividends which is computed by discounting future dividends as well as the terminal value using the required rate of return of 14.5% as the appropriate discount rate as shown thus:

Year 1 dividend=$.65

Year 2 dividend=$0.70

Year 3 dividend=$0.75

terminal value of dividends=Year 3 dividend*(1+g)/Ke-g

g=dividend terminal growth rate=2%

Ke=required rate of return=14.5%

terminal value of dividends=$0.75*(1+2%)/(14.5%-2%)=$ 6.12  

Share price=$.65/(1+14.5%)^1+$.70/(1+14.5%)^2+$.75/(1+14.5%)^3+$6.12/(1+14.5%)^3

share price=$5.68  

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Value; Sustain and Grow

Explanation:

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3 years ago
In an investment center, the manager has the responsibility for and the authority to make decisions that affect a. both costs an
yaroslaw [1]

Answer:

The answer is B.) Cost, revenue, and assets invested in the center

Explanation:

An investment center is a responsibility center in which the department manager is responsible for costs, revenues and assets for the department.

An investment center is also a business unit in a firm that can utilize capital to contribute directly to a company's profitability.

Examples of departments that make up the cost center are the human resource and marketing departments, units that falls under a profit center include the manufacturing and sales department.

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3 years ago
He schedule below represents the willingness of a typical consumer to pay for wine in a year. Suppose there are 10,000 identical
natta225 [31]

Answer:

a. ​ $30,000.

Explanation:

Willingness to pay is the highest amount a consumer would be willing to pay for a good or service. In this example, the willingness to pay is $50.

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To calculate the total consumer surplus , refer to the attached image, the consumer surplus is the shaded triangle.

The total consumer surplus = 1/2 base × (height)

The height is the difference between the willingness to pay and the price of the wine = $50 -$30 =$20

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I hope my answer helps you.

7 0
3 years ago
What does it mean to “diversify” your portfolio?
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Answer:

C. Spreading risk by investing your money in a variety of funds and investment options.

Explanation:

To “diversify” a portfolio is to invest in a variety of assets as opposed to focusing on one type of asset. To diversify is to invest in different classes of assets to minimize the risks associated with investing.

Diversification minimizes risk by spreading it in the different classes of assets. Should returns from one class of assets be unfavorable, the losses incurred will be neutralized by positive returns from the other assets.

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3 years ago
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