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Irina-Kira [14]
3 years ago
15

MGM Resorts Incorporated is expected to grow at an exceptionally high rate over the next 2 years due to the success of Macau cas

ino. Growth in dividends is expected to be 20% for the next 2 years before reverted back to a constant rate of 4% that is expected to continue indefinitely. If MGM Resorts’ paid a $1.20 dividend yesterday (D0=$1.20) and the stock is valued according to a required rate of return of 14%, what is the value of a share of MGM Resorts stock today?
Business
1 answer:
Burka [1]3 years ago
6 0

Answer:

The value of a share of MGM Resorts stock today will be $16.42

Explanation:

In order to calculate the value of a share of MGM Resorts stock today we would have to calculate the following steps:

Step-1, Dividend for the next 2 years

Dividend per share in Year 0 (D0) = $1.20 per share

Dividend per share in Year 1 (D1) = $1.4400 per share [$1.20 x 120%]

Dividend per share in Year 2 (D2) = $1.7280 per share [$1.4400 x 120%]

Step-2, Share Price in Year 2

Dividend Growth Rate after Year 2 (g) = 4.00% per year

Required Rate of Return (Ke) = 14.00%

Share Price in Year 2 (P2) = D2(1 + g) / (Ke – g)

= $1.7280(1 + 0.04) / (0.14 – 0.04)

= $1.7971 / 0.10

= $17.97 per share

Step-3, The Current Stock Price

As per Dividend Discount Model, Current Stock Price the aggregate of the Present Value of the future dividend payments and the present value the share price in year 2

Year      Cash flow ($)        PVF at 14.00%           Present Value of cash flows ($)

                                                                             [Cash flows x PVF]

1            1.4400                   0.877193                           1.26

2           1.7280                  0.769468                          1.33

2            17.97                   0.769468                          13.83

TOTAL   16.42

Hence, the value of a share of MGM Resorts stock today will be $16.42

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Answer:

flexibility

Explanation:

According to classical economists, the price-wage-interest rate flexibility refers to a combination of flexible factors that maintains economic stability:

  • Flexible interest rates keeps the money markets (loans) in equilibrium.
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Therefore, if spending declines, the economy will self-adjust using flexible interest rates (interest rates should lower), flexible wages (wages should lower) and flexible prices (prices should lower) until the economy rebounds.

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Manufacturing and Merchandising businesses

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The type of Business needed to make the product is known as MANUFACTURING business. This business buys raw materials and refined them into products that later sell in bulk to wholesalers.

On the other hand, Merchandising business is a form of business that involves buying refined products at wholesale price and then sell to the final consumers.

Hence, in this case, then Greece answer is MANUFACTURING and MERCHANDIZING Business.

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Suppose you have a two-stock portfolio consisting of Apple and Tesla stock. The portfolio weight of Apple is 25% and the rest is
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Standard deviation = 47.69% (Approx)

Explanation:

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Standard deviation return Tesla σ2 = 60% = 0.60

Correlation coefficient ρ12 = 0.22

Find:

Standard deviation

Computation:

Standard deviation = √w1²σ1² + w2²σ2² + 2w1σ1w2σ2ρ12

Standard deviation = 0.4769

Standard deviation = 47.69% (Approx)

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$2,200

Explanation:

Calculation to determine what should this recent grad be willing to pay in rent per month

First step is to calculate the work days

Using this formula

Work days = 5 days per week x 1 hour to work+ 1 hour from work

Let plug in the formula

Work days = 5 days a week x 2 hours

Work days= 10 hours

The second step is to calculate the monthly commuting in a standard month of 4 weeks

Monthly commuting = 4 x 10 hours

Monthly commuting = 40 hours

Third step is to calculate hourly how much she will be able to maximize

Amount maximize = $25 x 40 hours (commuting hours)

Amount maximize= $1,000

Now let determine The total she will be willing to pay in rent

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Answer:

1. Assembly line wages - Direct labor, manufacturing cost

2. Raw material used directly in product - Direct material, manufacturing cost

3. Depreciation on office equipment - In direct, Administrative cost

4. Property tax on factory building - Indirect, Manufacturing cost

6. Sales commission - Selling cost

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10. Advertising - Selling cost

11. Indirect material used in production - Indirect, Manufacturing cost

12. Factory manager's salary - Administrative cost

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The cost which is affected by the production of units is known as variable cost. The cost which does not vary with the units produced is fixed cost.

The costs which are related to selling and storage of the finished goods is selling cost. The cost which is not affected by units produced and is related to office premises and controlling an organization is administrative cost. The cost which varies with the production of units and is incurred to convert raw material into finished goods is manufacturing cost.

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