Answer:
$
, is the right answer.
Explanation:
Let's assume that, there are three stages of growth therefore three stage dividend discount formula is being used.
Dividend (D1) = 2
The negative growth is of 5%
![D1=2(1-0.05)=1.90](https://tex.z-dn.net/?f=D1%3D2%281-0.05%29%3D1.90)
The present value of D1 =2
![P(D1)=\frac{1.90}{1+0.1}=1.72](https://tex.z-dn.net/?f=P%28D1%29%3D%5Cfrac%7B1.90%7D%7B1%2B0.1%7D%3D1.72)
![D2=1.95*0.95=1.85](https://tex.z-dn.net/?f=D2%3D1.95%2A0.95%3D1.85)
![P(D2)= \frac{1.85}{(1+.1)^{2}}](https://tex.z-dn.net/?f=P%28D2%29%3D%20%5Cfrac%7B1.85%7D%7B%281%2B.1%29%5E%7B2%7D%7D)
![P(D2)=1.52](https://tex.z-dn.net/?f=P%28D2%29%3D1.52)
SECOND PERIOD OF ZERO GROWTH FOR TWO YEARS
![D3=1.85 \\P(D3)= \frac{1.85}{(1+.1)^{3}}](https://tex.z-dn.net/?f=D3%3D1.85%20%5C%5CP%28D3%29%3D%20%5Cfrac%7B1.85%7D%7B%281%2B.1%29%5E%7B3%7D%7D)
![P(D3)=1.38\\P(D4)=1.26](https://tex.z-dn.net/?f=P%28D3%29%3D1.38%5C%5CP%28D4%29%3D1.26)
THREE PERIOD IS CONSTANT GROWTH 6%
![D5=1.85(1+.06)=1.961 \\P(D5)= \frac{1.961}{(1+.1)^5} \\P(D5)=1.21 \\D6=1.961 \times 1.06==2.07 \\P(D6)=\frac{2.07}{(1.1)^6} \\P(D6)=1.17](https://tex.z-dn.net/?f=D5%3D1.85%281%2B.06%29%3D1.961%20%5C%5CP%28D5%29%3D%20%5Cfrac%7B1.961%7D%7B%281%2B.1%29%5E5%7D%20%5C%5CP%28D5%29%3D1.21%20%5C%5CD6%3D1.961%20%5Ctimes%20%201.06%3D%3D2.07%20%5C%5CP%28D6%29%3D%5Cfrac%7B2.07%7D%7B%281.1%29%5E6%7D%20%5C%5CP%28D6%29%3D1.17)
The equity values are = P(D1)+P(D2)+P(D3)+P(D4)+P(D5)+P(D6)
Equity values = ![1.72+1.52+1.38+1.26+1.21+1.17=8.29](https://tex.z-dn.net/?f=1.72%2B1.52%2B1.38%2B1.26%2B1.21%2B1.17%3D8.29)
Therefore, the current price will be $
Answer:
Total cost= $58,600
Explanation:
Giving the following information:
A company purchased new equipment for $53,000. The company paid cash for the equipment. Other costs associated with the equipment were: transportation costs, $2,300; sales tax paid $2,900; and installation cost, $3,300.
We will assume that the sales tax can be an exemption allowed by the state.
Total cost= 53,000 + 2,300 + 3,300= $58,600
Answer: The formula for simple interest is I=PxRxT. The calculations for each is below.
Explanation: The formula for simple interest is Interest = Principal x Rate x Time. In order solve for each of these variables you need to plug each into the formula.
40,000 x .07 = $2,800
50,000 x .07 = $3,500
60,000 x .07 = $4,200
70,000 x .07 = $4,900
80,000 x .07 = $5,600
90,000 x .07 = $6,300
40,000 x .09 = $3,600
50,000 x .09 = $4,500
60,000 x .09 = $5,400
70,000 x .09 = $6,300
80,000 x 09 = $7,200
90,000 x .09 = $8,100
Answer:
The stock should sell for = $2.01
Explanation:
<em>The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return. </em>
<em>The model is given as </em>
P = D× g/(r-g)
P- stock value, g- growth rate , r-m required rate of return
PV of dividend in year 30 = 12/(0.15- 0.06)=133.3333333
PV of dividend in year in year 0 = 133.3333333 × 1.15^(-30)= 2.01
The stock should sell for = $2.01
Answer:
Movement along
Explanation:
As we know that
There is an opposite relationship lies between the price and the demanded i.e. quantity as per the law of demand that means if the price increased than the quantity demanded decreased and vice versa
But when some changes are there in quantity demanded by having change in price keeping other things remain constant so the change in quantity demanded would be movement along with the demand curve and the same is to be considered