Answer:
The value of the firm's common stock is $48
Explanation:
The constant dividend growth model is used to determine the market value of the share and which can be expressed as:
here;
the value of the current market price of the share (P) = unknown?
The dividend expected in the next year (D) = $2.40
The required rate of return (r) = 12% = 0.12
The growth rate (g) = 7& = 0.07
Replacing the values into the above equation:
P = $48
Answer:
10 years and 10 months.
Explanation:
Provided information we have,
Amount invested = $2,500
Earning interest rate = 3.4% annually
Compounded semiannually
Thus, period to be considered = 2 in a year
Interest rate =
Thus, effective interest rate = 1.7%
Now, according to future value of compounded rate @ 1.7% at a period 65 factor = 2.9913
Thus value will be $2,500 2.9913 = 7,478.25
That is approximate triple in value.
Thus, total period in number of years = 65/6 months = 10.833 years.
0.833 12 months = 10 months
That exactly means 10 years and 10 months.