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
loris [4]
2 years ago
6

ART has come out with a new and improved product. As a result, the firm projects an ROE of 24%, and it will maintain a plowback

ratio of 0.15. Its earnings this year will be $2.0 per share. Investors expect a 11% rate of return on the stock. What price do you expect ART shares to sell for in 4 years?
Business
1 answer:
Ipatiy [6.2K]2 years ago
4 0

Answer:

$24.44

Explanation:

The computation of the price sell for in four years is shown below:

But before that first determine the following calculations

Growth Rate is

=  ROE  × Plowback ratio

= 24% × 0.15

= 3.6%

Now

Dividend per share is

= EPS × (1 - Plowback Ratio)

= $2 × (1 - 0.15)

= $1.57

And, finally

Price of share is = Expected Dividend Next Year ÷ (Required Return - Growth Rate)

It can be rearrange like

Price in 4 years = Dividend Year 5 ÷ (Required Return – Growth Rate)

= 1.57 × (1.036)^4 ÷ (11% - 3.6%)

= $24.44

You might be interested in
True or false: a database transaction is recorded only when a change is written to a database.
Alina [70]
That statement is false
Some of the database transaction could be recorded as soon as the transaction happen. Some companies may adopt different financial recording policy for their operation. It's not rare to see a company that will acknowledge transaction as soon as it happen so they could create a more accurate view about their company's financial position.
4 0
3 years ago
Robert Gillman, an equity research analyst at Gillman Advisors, believes in efficient markets. He has been following the mining
taurus [48]

Answer:

Growth rate 2.4%

Explanation:

MV=D1/(Ke-g)

Where MV=share market value=$15

D1=Dividend at year end=$.72

Ke=stock's expected rate of return=7.2%

By putting above values in formula, we get;

MV=D1/(Ke-g)

15=.72/(7.2%-g)

15*7.2%-15g=.72

1.08-15g=.72

.72-1.08=-15g

g= -.36/-15

g=2.4%

4 0
3 years ago
Read 2 more answers
Breadmakers, inc. produces and supplies fresh sandwich breads to various sandwich businesses. breadmakers has recently decided t
yarga [219]
<span>the answer is Direct distribution Direct distribution is a channel of distribution where the producer or manufacturer ensures his or her goods and services reaches the consumer without any intermediary like wholesalers or retailers, in this case all the middle players in the supply chain are eliminated. By opening its own stores for selling sandwiches to consumers, Breadmakers, inc. will be doing a direct distribution (direct supply to consumers)</span>
5 0
2 years ago
Elaine takes out a $100,000 mortgage on December 1, 1997. Elaine will repay the mortgage over 20 years with level monthly paymen
Dmitrij [34]

Answer:

I prepared an amortization schedule using an excel spreadsheet. The original monthly payment was $836.44. After the 120th payment, the remaining principal balance was $68,940.64. Since she didn't pay anything for 1 year, the new principal balance will be $68,940.64 x (1 + 8%) = $74,455.89

I prepared another amortization schedule for the remaining 9 years, and the monthly payment is $969.32. She will pay off the loan in 108 months.

Download pdf
<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark"> pdf </span>
<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark"> pdf </span>
8 0
3 years ago
Eliminating _______ pushes idea creation and decision-making out of headquarters and into the field. none of these pay bonuses p
natima [27]

The correct answer is layers of management. Layers of management is defined as a centralized, bureaucratic organization structure by which it is composed of three levels of management that are; top-level, middle level, and first level managers that are less top level managers.

3 0
2 years ago
Other questions:
  • Identify 3 skills you would expect a bookkeeper to have​
    6·1 answer
  • Anthony notices that his Discover Card statement gives the company's Web address (Discovercard) and directs him there to pay his
    13·1 answer
  • Which of the following events will directly cause the U.S. money supply to rise by $400 million?
    12·1 answer
  • Find 1 or 2 examples from this historically significant persuasive speech where President Reagan attempts to strengthen or
    10·1 answer
  • Under what circumstances, when a searching operation is needed, would sequential search not be appropriate?
    8·1 answer
  • The economic principle that helps ensure that scarce resources are allocated efficiently is
    9·1 answer
  • Last year, Capriana Corporation (CC) had sales of $200 million, and its inventory turnover ratio was 5.0. The CC’s current asset
    11·1 answer
  • Sunland Company’s budgeted manufacturing costs for 50000 squares of shingles are: Fixed manufacturing costs $12000 Variable manu
    7·1 answer
  • Lucy's Music Emporium opened its doors on January 1, 2015, and it was granted permission to use the same depreciation calculatio
    11·1 answer
  • Company Z understands that their business is at risk. How can they use step two in the
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!