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Blizzard [7]
3 years ago
11

Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends.

However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.25 coming 3 years from today. The dividend should grow rapidly - at a rate of 22% per year - during Years 4 and 5; but after Year 5, growth should be a constant 6% per year.
Required:
What is the value of the stock today?
Business
1 answer:
PolarNik [594]3 years ago
7 0

Answer:

$52.75

Explanation:

the discount rate for this question was not provided. the discount rate used is 10%

Value of the stock in year 1 and 2 = 0

value of the stock in year 3 = $1.25

value of the stock in year 4 = ($1.25 x 1.22) / 1.10^4 = $1.04

value of the stock in year 5 = ($1.25 x 1.22^2) / 1.10^5 = $1.16

value of the stock in perpetuality = ($1.25 x 1.22^2 x 1.06) / (0.1 - 0.06) = $49.30

Value of the stock today = $49.30 + $1.16 +  $1.04 + $1.25 = $52.75

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Financial measures are the sole means for making management decisions. T/F
makkiz [27]

Answer:

False

Explanation:

Management decisions are based on multiple variables. Here, by variables we mean that internal and external factors. These can be any.

When making management decisions only financial measures are not present, rather measures for human resource, measures for production, measures for customer relations, measures for performance are all related to management decisions.

Now that depends on the kind of decision a management wants to take, it not necessarily relates to financial measures every-time.

Thus, the above stated statement is false.

8 0
3 years ago
Kathy is 48 years of age and self-employed. During 2018 she reported $538,000 of revenues and $107,600 of expenses relating to h
Fynjy0 [20]

Answer:

Contribute to individual 401(k) = $61,000

Explanation:

Given:

Revenue = $538,000

Expenses = $107,600

Find:

Contribute to individual 401(k)

Computation:

Contribute to individual 401(k) = $55,000

Kathy is younger then 50 years so, She have t pay $6,000 more:

So,

Contribute to individual 401(k) = $55,000 + $6,000

Contribute to individual 401(k) = $61,000

6 0
3 years ago
Harold, a delivery man, washes and irons his own shirts. Sarah, his boss, sends her clothes to a laundry. Which is the most plau
marusya05 [52]

Answer: Sarah has a higher opportunity cost of laundering her clothes than Harold does.

Explanation:

The opportunity cost is the cost of choosing an option out of a set of available options to an individual. Sarah is wealthier than Harold, therefore sending her clothes to the laundry is easier for her than it is for Harold, therefore Sarah has a higher opportunity cost than John doing laundry, because she can easily pay to get the Job done, which is not the case for John.

8 0
4 years ago
Which argument would most likely be made by the author of the following passage?
AleksAgata [21]
The author of this passage that discusses the troubles farms face in covering their costs with funds from the government would most likely argue that farms rely too much on funding (specifically governmental funding), and they should attempt to make their own money if possible. Also the author would argue that government funding is often not enough and farms should attempt to raise their own funds or revenues privately. 
5 0
3 years ago
The towns of Jekyll and Hyde each have a labor force of 2,000 people. In Jekyll, 500 people were unemployed for the entire year,
zloy xaker [14]

Answer:

D) 12;3

Explanation:

The average duration of unemployment in Jekyll is 12 month and 3 months in Hyde. The total employees in Jekyll are 2000 out of which 500 are not employed during the entire year. The calculation will be as,  

For Jekyll town,

(500 unemployed labors * 12 months) / 500 unemployed employees

= 12 months.

For Hyde town,

(2000 employees * 3 month unemployed) / 2000 employees  

= 3 months.

7 0
3 years ago
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