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
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  

You might be interested in
HELPP on question 10
Lynna [10]

Answer:

land?

Explanation:

4 0
3 years ago
Read 2 more answers
BruceCo is planning on selling coffee cups for $14 each. The company can buy the cups for $2.00 and have them printed for $1.50.
s2008m [1.1K]

Answer:

72

Explanation:

Add all the expenses together ( $2.00 + $1.50 + 0.50 +1,000 = 1004) divide 1004 by $14 to get 72

4 0
3 years ago
Suppose the government wants to reduce cigarette consumption to 200 billion packs per year. The government could achieve this by
irakobra [83]

The government could achieve reduction of cigarette consumption to by imposing a per-unit tax on cigarettes of 200 billion packs per year

<h3>What can Taxation achieve?</h3>

A taxation refers to compulsory levies on individuals, business by the governments on their income, operation etc.

In conclusion, apart from the revenue that tax generates for the government official, its also serves as tool for controlling consumption.

Read more about taxation

<em>brainly.com/question/25783927</em>

5 0
2 years ago
Which savings account will earn the most interest?
mestny [16]

Answer:

it would be 10,000 for 4.00% interest for 4 years.

Explanation:

the reason is the amount would turn out at 10,824 dollars and you earned 824 dollars in income.

3 0
3 years ago
Suppose Bill Gates, founder of Microsoft, is interested in a small software company. He may offer to purchase the stock of this
Alenkasestr [34]

The action taken by Bill Gates in acquiring the shares of a small software company is called a tender offer.

<h3>What is a tender offer?</h3>

A tender offer is a type of offer given by an investor in respect of purchasing the shares of a public entity at a value within a defined period.

When Bill Gates offered to take over the shares of a small software entity at a cost that can attract the share investors to sell them off in the market. This action of Bill Gates tends to initiate a tender offer for the shareowners of the software entity.

Therefore, the tender offer is the action being taken by the founder of Microsoft company.

Learn more about Bill Gates in the related link:

brainly.com/question/1385934

#SPJ1

6 0
2 years ago
Other questions:
  • Geothermal corp. just announced good news: its earnings have increased by 20%. most investors had anticipated an increase of 25%
    13·1 answer
  • Effective notes do NOT __________.
    11·1 answer
  • The true cost of borrowing and lending is best measured by
    8·1 answer
  • All of the following are basic requirements for a fulfilling career except:
    7·1 answer
  • Rita earns $10 per hour. She puts 5% of her earnings in savings. Write an inequality to find how many hours h Rita must work to
    8·2 answers
  • Following is information on two alternative investments being considered by Jolee Company. The company requires a 6% return from
    5·1 answer
  • There are a number of specific steps in the appraisal process. What is the final step?
    6·1 answer
  • Davis Hardware Company uses a perpetual inventory system. How should Davis record the sale of inventory costing $620 for $960 on
    9·1 answer
  • Assume Sheryl Jenkins wants to accumulate $ 13,241.39 in two years. She currently has $ 10,621.36 to invest. What interest rate
    10·1 answer
  • Common stocks have less security than ______________ stock, but it also has greater potential for reward.
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!