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Step2247 [10]
2 years ago
12

A stock will pay no dividends for the next 5 years. Then it will pay a dividend of $5 growing at 2%. The discount rate is 10%. W

hat should be the current stock price?
Business
1 answer:
jok3333 [9.3K]2 years ago
8 0

Answer:

$38.81

Explanation:

The value of the stock is the present value of its future divided payments, bearing in mind that the first dividend is payable six years from,hence, the present value of dividend in year 5( a year before its payment) is then computed thus:

PV of dividend at the end of year 5=expected dividend/discount rate-growth rate

expected dividend in year 6=$5

discount rate=10%

growth rate=2%

PV of dividend at the end of year 5=$5/(10%-2%)

PV of dividend at the end of year 5=$62.50

We need to discount the PV backward by 5 years to show the stock value today

the current stock price=$62.50/(1+10%)^5

the current stock price= $38.81  

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2 years ago
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Answer:

The opportunity cost of the time spent studying includes: 2) the benefit that could have been received at the street festival

Explanation:

The cost of opportunity is the alternative that you sacrifice when you choose an option.  It represent the <u>benefits that you misses out</u> on when choosing one alternative over another.  

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Answer:

Variable Cost per hour is $4.86

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given data

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Lowest Cost = $19,772

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solution

we get here Variable Cost per hour that is express as

Variable Cost per hour = (Highest Cost - Lowest Cost) ÷ (Highest Cost Driver - Lowest Cost Driver)   ......................1

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2 years ago
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