Answer:
The current price per share is $84.16
Explanation:
The dividend discount model (DDM) estimates the value of a share/stock based on the present value of the expected future dividends from the stock. We will use the two stage growth model of DDM here as the growth in dividends of the stock is divided into two stages.
The formula for current price under two stage growth model is,
P0 = D0 * (1+g1) / (1+r) + D0 * (1+g1)^2 / (1+r)^2 + ... + D0 * (1+g1)^n / (1+r)^n +
[( D0 * (1+g1)^n * (1+g2)) / (r - g2)] / (1+r)^n
Where,
g1 is initial growth rate
g2 is the constant growth rate
r is the required rate of return
So, the price of the stock today will be,
P0 = 2.05 * (1+0.24) / (1+0.11) + 2.05 * (1+0.24)^2 / (1+0.11)^2 +
2.05 * (1+0.24)^3 / (1+0.11)^3 + [( 2.05 * (1+0.24)^3 * (1+0.07)) / (0.11 - 0.07)] / (1+0.11)^3
P0 = $84.1556 rounded off to $84.16
Answer:
C) $500
Explanation:
First we must determine the money multiplier = 1 / reserve ratio:
- money multiplier = 1 / 20% = 5
The bank's checkable deposits originally increase by $100, and since it will be able to lend all the money it can, $80, its checkable deposits will also increase by $80 x 5 (money multiplier) = $400.
So the total increase in the bank's checkable deposits = $100 (original deposit) + $400 (money created through loans) = $500
<span>what is the price-earnings ratio</span> is 17.1
Answer:
C. Efficiency and equity.
Explanation:
In designing a tax system, their are many factors that can easily stand out to be hindrances seen to be present; here it could be the policymakers, law enforcement agencies, the financial institutes etc. But in the case above, the main focus is seen to be on the policymakers.
Here, there are to main objectives that are seen and observed according to research to be the two main factors that are conflicting between policymakers which are their efficiency and also their equity. Therefore, to easily set the public and private investment, government taps tax revenues.
