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Sholpan [36]
3 years ago
11

MECCS Inc. stock paid its annual dividends of $4.90 per share yesterday. The dividend is expected to decrease at a constant rate

of 2.50 percent per year indefinitely. Investors require a rate of return of 8.60 percent on the stock. How much should one share of the stock be priced today
Business
1 answer:
emmainna [20.7K]3 years ago
7 0

Answer: $43

Explanation:

The current stock price will be calculated as:

= Do(1 - g) / (Ke + g)

where,

Do = $ 4.90

g = 2.50%

Ke = 8.60%

Po = [4.90 - (1 - 0.025)] / [0.086 + 0.025]

Po = 4.7775 / 0.111

Po = $43

The price of one share of the stock today will be $43

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Answer:

a) 1.66 minutes

b) 3.4 out of million deliveries

Explanation:

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<u>Six Sigma:</u>

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<em>Please refer to the table shown in the attachment.</em> This bell curve represent six sigma concept. In this <em>3 sigma quality level means all deviations must lie in 6 standard deviations.</em>

So, here we have been given that mean = 20, so with mean we can calculate standard deviation in six sigma control limits.

Maximum Allowable Standard Deviation for 6 sigma = Mean/12

                                                                                        = 20/12

                                                                                       = 1.66

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<em>So, it 3.4 times in a million deliveries bus will deliver students either too early or too late. </em>

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Answer:

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