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Harlamova29_29 [7]
2 years ago
13

asino Inc. expects to pay a dividend of $3 per share at the end of year 1 (Div1) and these dividends are expected to grow at a c

onstant rate of 6 percent per year forever. If the required rate of return on the stock is 18 percent, what is the current value of the stock today?
Business
1 answer:
pentagon [3]2 years ago
5 0

Answer:

the current stock of the value today is $25

Explanation:

The computation of the current stock of the value today is shown below:

Next year dividend D1 = $3

growth rate g =6% forever

rate of return = 18%

So,

Current Stock Price P = D1 ÷ (r - g)

=3 ÷ (18% - 6%)

= 3 ÷ 12%

= 3 ÷ 0.12

= $25

Hence, the current stock of the value today is $25

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Stock A has an expected return of 17.8 percent, and Stock B has an expected return of 9.6 percent. However, the risk of Stock A
MrRissso [65]

Answer:

13.70%

Explanation:

The expected return of a portfolio is said to be the weighted average of the returns of the individual components,

Given that:

Stock A has an expected return = 17.8%

Stock B has an expected return = 9.6%

the risk of Stock A as measured by its variance is 3 times that of Stock B.

If the two stocks are combined equally in a portfolio;

Then :

The weight of both stocks will be 50% : 50 %

So the  portfolio's expected return can be determined as follows:

Expected return for stock A  = 50% × 17.8%

Expected return = 0.50 × 17.8%

Expected return = 8.9 %

Expected return for stock B = 50 % × 9.6 %

Expected return for stock B = 0.50 × 9.6%

Expected return for stock B = 4.8%

Expected return of the portfolio = summation of the expected return for both stocks

Expected return of the portfolio = 8.9 %  + 4.8%

Expected return of the portfolio =  13.70%

3 0
3 years ago
Suppose a farmer in Georgia begins to grow peaches. He uses​ $1,000,000 in savings to purchase​ land, he rents equipment for ​$1
mina [271]

Answer:

-$475,000

Explanation:

Total revenue = Baskets of peaches × Price

                       = 100,000 × $3

                       = $300,000

Explicit cost:

= Rent equipment + wages

= $100,000 + $100,000

= $200,000

Implicit cost:

= Land × Interest + salesman earned

=  $1,000,000 × 0.55 + $25,000

= $575,000

Total cost = Explicit cost: + Implicit cost

                = $200,000 + $575,000

                = $775,000

Economic profit = Total revenue - Total cost

                           = $300,000 - $775,000

                           = -$475,000

8 0
3 years ago
State two reasons why people work
Hunter-Best [27]

Answer:

earn money, make a change, fulfill their dreams

Explanation:

3 0
2 years ago
Read 2 more answers
There are many different workplaces in the Architecture and
V125BC [204]

Answer:

The non public area of a large building

Explanation:

There is no public traffic to content with and ample space to work.

3 0
2 years ago
Read 2 more answers
Based on this income statement for Company XYZ for the year ending December 31, 2014, what adjustment would need to be made to N
RoseWind [281]

Answer:

a) Adjustment of (16,000) in the operating section.

Explanation:

While preparing the operating activities section of the cash flow statement, the net income, depreciation expense, amortization expense, loss on sale of an asset should be added and the profit on sale should be deducted

So there is the loss of $30,000 that should be added and the gain on sale should be deducted i.e. $46,000

So there is an adjustment of -$16,000 in the operating activities section

6 0
2 years ago
Read 2 more answers
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