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]
3 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]3 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
Plz, help ASAP!!!!!!!
Ulleksa [173]

Answer:

The correct answer is letter "D": 2%.

Explanation:

In 2019, the highest Average Percentage Yield (<em>APY</em>) banks offered in a <em>traditional savings account</em> was 0,01%. The situation is unlikely to change exponentially for 2020. However, the best option is choosing an <em>online savings account </em>since they are offering an APY of up to 2% (<em>HSBC</em>).

4 0
3 years ago
Nikolai knows that what his boss has asked him to do is not in the best interest of the company. He also knows that if he does n
Karo-lina-s [1.5K]

Answer:

The correct answer is letter "D": if all else fails, slow the spread of bad practice.

Explanation:

Evidence-based management is a critically thought-provoking approach to decision making. This practice has the following principles: treat your organization as an unfinished prototype; <em>no brag, just facts; see yourself and your organization as outsiders do; evidence‐based management is not just for senior executives; like everything else, you still need to sell evidenced‐based management; if all else fails, slow the spread of bad practices; and questioning what happens when people fail? </em>

In front of a problematic situation, the "if all else fails, slow the spread of bad practices" is used when the consequence of an action is likely to be negative, but usually represents an order in the relationship of a principal-agent. The agent then carries out the necessary procedure as slowly as possible to prevent an unexpected reaction.

5 0
4 years ago
Greg, a supervisor, is known by his managers to be sharp in his decisions and has a good track record of meeting his goals. greg
professor190 [17]
The answer to this question is: Effective manager
in business, effectiveness refers to the ability for a person to make use of all resources that available to him/her in order to accomplish the goal.
This trait is considered as the most desired trait that most of the shareholders seek when they're choosing the leader for their company.

6 0
4 years ago
Growing my business or someone else's​
yulyashka [42]

Answer:

is this question

you may go to growong your business

4 0
3 years ago
A minor explosion occurs at the chemical processing plant of Clement Inc. In order to study the situation and make recommendatio
Dominik [7]

Answer:

A. Safety engineers

Explanation:

Safety engineers are engineers who combine both health and safety in measures while developing procedures and systems with the aim of safeguarding and protecting people from getting injury and illness in the work place or environment. Their job description involves analyzing reasons for accidents, identifying potential hazards, suggesting procedures that can be taken by personnel in that workplace to protect themselves from harm and also preventing the occurence of accidents by bringing in accident proof systems of operations.

4 0
3 years ago
Other questions:
  • OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $4 million,
    14·1 answer
  • Brianne, vice president of finance, and Dominic, vice president of human resources, are:________.
    9·1 answer
  • What is the difference between subcontractors and contractors
    14·1 answer
  • You have decided to refinance your mortgage. You plan to borrow whatever is outstanding on your current mortgage. The current mo
    12·1 answer
  • The rates of return on Cherry Jalopies, Inc., stock over the last five years were 22 percent, 11 percent, −4 percent, 6 percent,
    12·1 answer
  • A process costing system is employed in those situations where: Question 3 options: A) full or absorption cost approach is not e
    7·1 answer
  • Who is responsible for withholding the employees income tax?​
    14·1 answer
  • There were 1,700 units in beginning inventory that were 40% complete with regard to conversion. During the month, 8,550 units we
    12·1 answer
  • What is an incentive?
    14·1 answer
  • The file manager is a user . is an example of a file manager in Microsoft Windows.
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!