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padilas [110]
3 years ago
7

Good Investments Company forecasts a $1.74 dividend for 2017, $1.87 dividend for 2018 and a $1.98 dividend for 2019 for Mountain

Vacations Corporation. For all years after 2019, Good Investments Company forecasts that Mountain Vacations will pay a $2.10 dividend. Using the dividend discount valuation model determine the intrinsic value of Mountain Vacations Corporation, assuming the company's cost of equity capital is 7%. Select one: A. $24.48 B. $18.12 C. $27.91 D. $29.37
Business
1 answer:
Alex17521 [72]3 years ago
5 0

Answer:

The correct option is D,$29.37

Explanation:

The intrinsic value of the company is the present value of the dividends plus the present value of the terminal value in year 3

present of dividends=$1.74/(1+7%)+$1.87/(1+7%)^2+$1.98/(1+7%)^3=$ 4.88  

Terminal value=dividend after year /cost of capital

                       =$2.10/7%=$30

present value of terminal value=$30 /(1+7%)^3=$ 24.49  

Note that the discount factor of year 3 is applicable to the terminal value as well.

sum of present value of dividends and terminal value=$ 24.49+$4.88=$29.37

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gulaghasi [49]
The answer for this question is: Convergence
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8 0
3 years ago
Business messages usually conclude with a Multiple choice question. summary. supporting reasons. call to action. primary message
belka [17]

Business messages usually conclude with a call to action.

<h3>What are business messages?</h3>

These are the ways through which companies and business have to communicate with one another.

The mediums through which they communicates includes:

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3 0
2 years ago
As it relates to source selection and procurement integrity, an appearance of a conflict of interest is not as bad as an actual
Luden [163]

Answer:

False

Explanation:

The reputation can be permanently harmed when a conflict of interest is possible.

7 0
3 years ago
A city sells $15 million of general obligation bonds on October 1, 2019. The bonds mature at the rate of $1 million a year each
alexgriva [62]

Answer:

The multiple choices are:

a.$15,000,000

b.   $14,000,

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d.   $0

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Explanation:

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3 years ago
True or false: An aspect of product performance that is mission-critical, such as safety for an automobile, increases price sens
kicyunya [14]

Answer:

False

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7 0
3 years ago
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