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Alja [10]
3 years ago
9

Todd Mountain Development Corporation is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow a

t the rate of 12% per year. The risk-free rate of return is 6%, and the expected return on the market portfolio is 16%. The stock of Todd Mountain Development Corporation has a beta of 0.90. Using the constant-growth DDM, the intrinsic value of the stock is _________.
Business
1 answer:
creativ13 [48]3 years ago
6 0

Answer: $100

Explanation:

We can use 2 formulas to calculate the intrinsic value of the stock because of the figures we are given being the Capital Asset Pricing Model and the Constant Growth DDM model.

Figures given are,

D1 = $3

g = 12%

Rf = 6%

Rm = 16%

Be = 0.90

We will use CAPM to calculate the Expected Return on the stock, the formula is

Re = Rf + (Rm-Rf)*Be

Rf is the risk free rate

Rm is the market rate

Be is the beta

Re = 0.06 + (0.16-0.06)*0.9

Re = 15%

Now using the constant-growth DDM, the intrinsic value of the stock is,

Po = D1/(Re-g)

Where

D1 is the next dividend

Re is the expected return

g is the growth rate

Plugging in the figures we have,

Po = 3/(0.15-0.12)

P0 = $100

Intrinsic value is $100

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Answer:

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Some behavior or actions that are considered completely out of place or might even be illegal in the UK are totally normal in Saudi Arabia, and vice versa. I met someone that used to work in the middle east and he remembers that subordinates have a great respect for their leaders and do not question anything. But at the same time, normal motivation techniques didn't work with them. I remember he told me that in order to be able to make his team work he had to be rude with them and basically order them what to do and make sure they did it. This behavior would be unacceptable in western countries, bosses do not yell at employees all the time, but it worked for him there.

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6 0
3 years ago
n the balance sheet at the end of its first year of operations, Dinty Inc. reported an allowance for uncollectible accounts of $
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Answer:

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In this context, consumer education is a strategic process which typically involves gaining the necessary resources and skills required to manage consumer resources in order to continue to provide satisfactory services to them.

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