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
Gnesinka [82]
2 years ago
7

Assume today is December 31, 2019. Imagine Works Inc. just paid a dividend of $1.25 per share at the end of 2019. The dividend i

s expected to grow at 15% per year for 3 years, after which time it is expected to grow at a constant rate of 6% annually. The company's cost of equity (rs) is 9.5%. Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2019)
Business
1 answer:
lidiya [134]2 years ago
5 0

Answer:

Value of stock = $47.99

Explanation:

<em>The price of a stock using the dividend valuation model is the present value of the the future dividend expected from the stock discounted at the required rate of return.</em>

Year                                   Present Value  

1    1.25× 1.15^1 × 1.095^(-1) =1.31

2    1.25× 1.15^2 × 1.095^(-2) = 1.38

3.    1.25× 1.15^3 × 1.095^(-3)= 1.45

Present value of Dividend in Year 4 and beyond

This will be done in two steps

Step 1

PV in year 3 terms  

= Dividend in year 4× (1.06)/(0.095-0.06)

1.25× 1.15^3 × 1.06/(0.095-0.06)=57.57

PV in year 0 terms =

PV in year 3 × 1.095^(-3)

=57.5759 × 1.095^(-3)= 43.852

Value of stock = 1.3  + 1.38 + 1.45  + 43.852= $47.99

Value of stock = $47.99

You might be interested in
Winter Company earned revenues of​ $150,000 in cash and​ $200,000 on account during 2018. Of the​ $200,000 on​ account, $63,000
ICE Princess25 [194]

Answer:

$235,000

Explanation:

Under the accrual accounting system, expenses are recognized in the period incurred and not necessarily in the period cash is paid.

Revenue is also recognized in the period earned and not necessarily when cash is collected.

Total revenue in 2018 = $200,000 + $150,000

= $350,000

Net income is the difference between the revenue and expense

Net income in 2018 = $350,000 - $115,000

= $235,000

8 0
3 years ago
Many times, clients will shift new people into the project who have no experience with it as they move their key people to new c
bazaltina [42]

Answer:

Many times, clients will shift new people into the project who have no experience with it as they move their key people to new challenges. This issue is: One that is external and intellectual.

Explanation:

External issues do not affect an entity obviously.  The clients shifting new people into projects and moving their key people to new challenges know why they must be doing so.  It may be to encourage organizational learning.  It may be because the key people have been promoted and need to move to higher positions.

Most importantly, it is the clients as entities that we should be concerned and deal with.  Clients like other organizational entities have systems, processes, and policies that they work with to produce results.  Their internal management should remain internal and not be externalized by overtly and overzealous outsiders.

6 0
3 years ago
Inventory records for Dunbar Incorporated revealed the following: Date Transaction Number of Units Unit Cost Apr. 1 Beginning in
Drupady [299]

Answer:

$816

Explanation:

Calculation for Dunbar Incorporated Ending inventory

Formula for Ending inventory units using FIFO method:

Ending inventory units = Beginning balance + Purchase -sales

Leg plug in the formula

490+410 - 600

= 300units

Calculation for Ending inventory

Ending inventory = 300*2.72

= $816

Therefore the Ending inventory assuming FIFO method is use would be $816

3 0
3 years ago
Carly donated inventory (ordinary income property) to a church. She purchased the inventory last month for $100,000, and on the
MissTica

Answer:

$92,00

Explanation:

Base on the scenario been described in the question which we saw how Carly donated an to the church, when she purchased the gift, it was $100,000 but when she is to present the gift to the church, the fair market value became $92,000 which is her maximum charitable contribution deduction

the charitable deduction for ordinary income property is the lesser of fmv or basis limited to 50% of AGI

8 0
2 years ago
In the 1970s japan developed new technologies and achieved high productivity that resulted in
matrenka [14]

New innovation and technology resulted into new business and made Japan a developed countryI believe the closest possible answer to this question is that Japan's prolific inventions were an advantage to the country, in that, they were able to produce business and generate a more efficient system through science and technology.

Thank you for your question. Please don't hesitate to ask in Brainly your queries
8 0
3 years ago
Read 2 more answers
Other questions:
  • When a firm changes its capital structure by issuing or retiring debt, for example, this change alters the firms unlevered free
    9·1 answer
  • Match each definition with its related term by selecting the appropriate term in the dropdown provided. There should be only one
    12·1 answer
  • considering synonymthe web 2.0 is not a new and improved version of the internet. which of the following alternate names most ac
    5·1 answer
  • Unsystematic Risk:a. can be effectively eliminated by portfolio diversificationb. is compensated for the risk premiumc. is measu
    13·1 answer
  • Jamarcus, a full-time student, earned $2,500 this year from a summer job. He had no other income this year and will have zero fe
    15·1 answer
  • a firm in a perfectly competitive industry is producing 1000 units of output and earning revenues of 50000. At that level of out
    6·1 answer
  • Why is it important to be aware of the workplace culture
    5·1 answer
  • What is a hallmark of assembly lines in Henry Ford's time?
    12·1 answer
  • Wiki Wiki Company has determined that the variable overhead rate is $4.50 per direct labor hour in the Fabrication Department. T
    5·1 answer
  • Imagine that you are given $3,000 to plan a vacation for your family. Research destinations and choose one. Research the destina
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!