1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Delvig [45]
3 years ago
13

Suppose firm X just paid its annual dividend of $2.00 per share. You expect that the firm will continue to pay $2.00 per share (

per year) for the next 10 years (times t=1 through 10), after which point you expect that the annual dividend per share will grow by 12% every year thereafter (forever). If the required rate of return is 15%, what is the current price per share?
Business
1 answer:
ivanzaharov [21]3 years ago
6 0

Answer:

Current price per share = $10.54

Explanation:

Note: See the attached file for the calculation of present values (PV) for year 1 to 10 dividends.

From the attached excel file, we have:

Total of dividends from year 1 to year 10 = $10.0375372517085

Year 10 dividend = $0.494369412243732

Therefore, we have:

Year 11 dividend = Year 10 dividend * (100% + Dividend growth rate after year 10) = $0.494369412243732 * (100% + 12%) = $0.55369374171298

Share price at year 10 = Year 11 dividend / (Required return rate - Dividend growth rate after year 10) = $0.55369374171298 / (15% + 12%) = $2.05071756189993

PV of share price at year 10 = Share price at year 10 / (100% + Required return rate)^Number of years = $2.05071756189993 / (100% + 15%)^10 = $0.506906017877183

Therefore, we have:

Current price per share = Total of dividends from year 1 to year 10 + PV of share price at year 10 = $10.0375372517085 + $0.506906017877183 = $10.54

Download xlsx
You might be interested in
The solution (x,y) to a system of equations is the point where they
slamgirl [31]
Intersect. On a graph that is where they intersect.
8 0
3 years ago
Competitive firms hire workers until the additional benefit they receive from the last worker hired is equal to(i)the additional
xeze [42]

Answer:

The correct answer to the following question is option B) both statements i and ii are correct.

Explanation:

First of all the marginal product can be defined as the additional unit of product that a business can produce by using additional unit of input. And marginal revenue product refers to the change that occurs in the total revenue due to the production of additional unit of product.

Any competitive firm would hire additional workers only when the MRPL (marginal revenue product of labor) is greater than the wages paid to that labor and additional cost incurred in hiring those workers and they would stop hiring the workers when the MRPL is equal to the cost paid to the workers.

4 0
3 years ago
A-Plus Linens sent the following notice to John C. Lincoln Hospital: "We'll pay you. Drop your current linen service and we'll g
ehidna [41]

Answer:The answer is a

Explanation:

A contract is an agreement between two or more parties which contains the terms and conditions of the contract and which also serve as an evidence that the two parties in the contract has a duty to perform to each other. The terms and conditions of the contract can be enforced in the court of law in case of a breach of contract which may come from either parties in the contract agreement. While, a contract interference is a kind of breach of contract in which one vendor put a pressure on the organization in which they offer service to withdraw from the contract the organization earlier had with one of their competitors in the market. This contract interference can occur when a vendor either force or put a financial inducement on the organization with a view to make them consider their proposal to the organization to eventually agree to abandon the contract they had with their competitors in favour of getting the contract instead of their competitors who should get the contract.

Therefore, from what we can deduce from the question under review, it is clear that A plus linen has engage in contract interference by offering John C Lincoin hospital $5 for every 100 pound of linen they send to them by dropping their current linen service.

5 0
3 years ago
Research studies indicate that:
Alborosie

Answer:

Option D US consumers lose more from tariffs than U.S. producers gain

Explanation:

The reason is that the US has imposed tariffs on the import of goods to overcome the comparative advantage of the other countries. So by imposing tariffs the US producer's products become inexpensive and protects them from the foreign countries with comparative advantage in similar products. This means the US consumer is buying expensive products and don't motivates the US producer to invest in efficiency and that the size of the industry may be at the growth stage or the producer's size is very small which means it can not compete with the competitors in the international market. So as a result the US consumer suffer more because they pay higher payments and are forced to buy expensive American products which is less in value to the consumer than the value it generates to the producers.

6 0
4 years ago
Morgan Company issued cumulative preferred stock. What additional special feature(s) could also have been granted to preferred s
djyliett [7]

Answer:

-The right to convert the shares to common shares

-The right to redeem the preferred shares for cash

8 0
3 years ago
Other questions:
  • The story of the Reset Button is an example of a noise caused by (select all that apply)
    12·1 answer
  • Unistar Inc., is an FMCG company that produces a wide range of offerings such as grocery items and personal care products. If Un
    9·1 answer
  • You are preparing a presentation on networking for a professional development seminar that your company is hosting for its emplo
    15·1 answer
  • Social interaction is ________.a. the way in which a society is organized into predictable relationships. b. the process of lear
    8·1 answer
  • Waterway Industries reported the following data: 2020 2021 Sales $2980000 $4850000 Net Income 293000 391000 Assets at year end 1
    7·1 answer
  • On January 1, 2021, G Corp. granted stock options to key employees for the purchase of 87,000 shares of the company's common sto
    13·1 answer
  • Determine the monthly payment, total interest,
    14·1 answer
  • Shandra Corporation (a U.S.-based company) expects to order goods from a foreign supplier at a price of 131,000 pounds, with del
    12·1 answer
  • In 2022 the Splish Brothers Inc. had net credit sales of $1020000. On January 1, 2022, the Allowance for Doubtful Accounts had a
    11·1 answer
  • Which of the following are not traits of entrepreneurs?
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!