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Alborosie
3 years ago
8

You expect Technomess Company common stock to pay a dividend of $2.40 one year from now. You can buy the stock now for $52, and

you plan to sell the stock at the end of one year. Given the risk of the stock, your required rate of return is 16%. For what price would you need to sell your stock in one year in order to earn your required rate of return
Business
1 answer:
Vinil7 [7]3 years ago
4 0

Answer:

The stock price = $57.92

Explanation:

The return on a stock is the sum of the capital gains(loss) plus the dividends earned.

Capital gain is the difference between he value of the stocks when sold and the cost of the shares when purchased.

Total shareholders Return =  

(Capital gain/ loss + dividend )/purchase price × 100

16% = ((x-52) + 2.40)/52

0.16×52 = (x-52) + 2.40

8.32 = X- 52 + 2.40

52+8.32-240=X

57.92 = X

$57.92= X

The stock would need to be sold for  = $57.92

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Basile [38]

Answer:

A

Explanation:

This is because it allows the respondent indicate the intensity of his or her feelings by using the agree-disagree response continuum position according to the Likert survey rating scale.

5 0
3 years ago
The future earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow 7% per year. Carpetto'
bearhunter [10]

Answer:

14.05%

Explanation:

Given that,

Beta = 1.3

Risk-free rate (Rf) = 9.5%

Return on the Market (RM) = 13%

According to CAPM approach:

Cost of common equity (RE):

= [Rf + β (RM – Rf)]

= [9.5% + 1.3 (13% - 9.5%)]

= [9.5% + 1.3 (3.5%)]

= [0.095 + 1.3 (0.035)]

= [0.095 + 0.0455]

= 0.1405

= 14.05%

Therefore, the firm's cost of common equity is 14.05%.

8 0
3 years ago
Which of the following are examples of natural barriers to entry? Correct Answer(s) Drag appropriate answer(s) here Smaller comp
andreyandreev [35.5K]

Answer:

These are correct:

  • Smaller companies with smaller production processes have higher per unit costs than larger companies. - smaller firms find it harder to adopt economies of scale to reduce costs.
  • Over time, a firm takes control of 85% of the world’s supply of a chemical used in the production of plastic. - the firm has almost total control over a scarce resource, and new competitors have to scramble for the remaning 15%. (note: this is a natural barrier to entry as long as the pharmaceutical company did not collude with the government to reach such a high market share, in said case, it would be an artificial barrier to entry).
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5 0
3 years ago
If the domestic demand curve is Equal 20p Superscript negative 0.5​, the domestic supply curve is Equal 5p Superscript 0.5​, and
pishuonlain [190]

Answer:

$52

$ 1.33

  • consumer price will increase
  • consumer surplus will decrease
  • import will decrease
  • reduced export
  • portends gloom for the general outlook for the economy

Explanation:

Given domestic demand curve, S(p) = 20p⁻⁰°⁵

the domestic supply curve S(p)= 5p⁰°⁵

world price is ​$7.00

using  calculus to determine the changes in consumer​ surplus

by consumer surplus means in this case supply exceeds demand

we establish the equilibrium point where the supply and demand functions meet or are equal

solving 20p⁻⁰°⁵ = 5p⁰°⁵

     20/5 = p⁰°⁵/p⁻⁰°⁵

       4 = p⁰°⁵⁺⁰°⁵

      4= p = q which is the quantity produced

     

consumer surplus =  maximum price willing to pay - Actual price

                             = ∫⁴₀  dp dp - p* q

                               =  ∫⁴₀20p⁻⁰°⁵ dp- 7* 4

                              = 20∫⁴₀p⁻⁰°⁵ dp -28

                              = 20/0.5 p⁰°⁵- 28

                              = 40 *4⁰°⁵ - 28 =  $52

producer surplus = it is a measure of producer welfare. It is measured as the difference between what producers are willing and able to supply a good for and the price they actually receive

thus  producer  surplus = p* q - ∫⁴₀  d(s) dp

                                         = 7 * 4 - ∫⁴₀  5p⁰°⁵  dp

                                         = 28 - 5 ∫⁴₀   p⁰°⁵    dp

                                         = 28 -5 *2/3  p¹°⁵  

                                          = 28 -5 *2/3  4¹°⁵

                                          =$ 1.33

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