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lilavasa [31]
3 years ago
10

g Mystery Inc has a beta of 1.1. The firm just paid a dividend of 60 cents and the dividends are expected to grow at 5.5% per ye

ar. The expected return on the market is 10% and treasury bills have a yield of 5%. The company's current stock price is $45. Calculate the cost of equity using the dividend growth model.
Business
1 answer:
12345 [234]3 years ago
4 0

Answer:

6.91%

Explanation:

The formula for share price using the dividend growth model stated below can be used to determine the cost of equity as well whereby the formula is rearranged in order to make the cost of equity the subject as shown thus:

share price=expected dividend/(cost of equity-growth rate)

share price=$45

expected dividend=last dividend*(1+dividend growth rate)

expected dividend=$0.60*(1+5.5%)=0.633

cost of equity=the unknown

dividend growth rate=5.5%

45=0.633/(cost of equity-5.5%)

45*(cost of equity-5.5%)=0.633

cost of equity-5.5%=0.633/45

cost of equity=(0.633/45)+5.5%

cost of equity=6.91%

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When perfectly competitive firm X sells three units of product Z, its marginal revenue is $4.67. When it sells one hundred units
Sedaia [141]

Answer:

<u>A) $4.67</u>

Explanation:

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8 0
3 years ago
If all of your organization's data is centralized in a small number of data centers, than focusing security on perimiter defense
Bogdan [553]

The answer is false.

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If one protection fails, another is present to prevent an attack. This deliberate redundancy increases security and helps guard against a broader range of assaults.

Therefore, answer is false.

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5 0
1 year ago
Which of the following bases of power emphasizes threatening or actual punishment?
gizmo_the_mogwai [7]
<h2>Hello!</h2>

The answer is C. Coercive.

<h2>Why?</h2>

According to the bases of power, coercive power means that someone can punish someone who deserves it when it's needed, punishment can be just punishment but it can also mean serious actions as demoting, restricting privileges or in the last instance, firing people.

Coercive power can be a problem if it's applied to everyone, every time, the result of coercive actions applied in an inappropriate way could result in useful people resignations. That's why coercive tools are the last resort if corrections are needed.

Have a nice day!

6 0
3 years ago
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last year, jarod left a job that pays $80,000 to run his own bike repair shop. jarod’s shop charges $65 for a repair, and last y
irinina [24]

The accounting profit of Jarod based on the information regarding rent, wages, etc given will be $55000.

It should be noted they the formula for calculating accounting profit will be:

= Total revenue - Explicit cost

Total revenue will be:

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Explicit cost is the direct cost that a business spends. This will be:

= $60000 + $120000 + $25000

= $205,000

Therefore, the accounting profit will be:

= $260000 - $205000

= $55,000

The accounting profit is $55000.

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6 0
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