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Pavlova-9 [17]
2 years ago
12

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 $0.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 49% per year - during Years 4 and 5; but after Year 5, growth should be a constant 9% per year. If the required return on Computech is 16%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations.
Business
1 answer:
Arturiano [62]2 years ago
5 0

Answer: $8.81

Explanation:

To solve this, add the present values of the dividends from years 3, 4 and 5 and then add the present value of the terminal value of the stock at year 5.

Year 3 dividend = $0.50

Year 4 dividend = 0.50 * (1 + 49%) = $0.745

Year 5 dividend = 0.745 * 1.49 = $1.11005

= Dividend in year 3 / (1 + required rate of return)³ + Dividend in year 4 / (1 + required rate of return)⁴ + Dividend in year 5 / (1 + required rate of return)⁵ +   (Dividend in year 5 * (1 + growth rate) / ( required rate of return - growth rate ) ) / (1 + required rate of return)⁵

= 0.5 / 1.16³ + 0.745/1.16⁴ + 1.11005/1.16⁵ + ( 1.11005 / (16% - 9%)) / 1.16⁵

= $8.81

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_____ refers to the actions of consumers directly involved in obtaining, consuming, and disposing of products, and the decision
Rashid [163]

Answer:

Consumer behavior

Explanation:

It is the decision process in which consumers evaluate, select, acquire, use and dispose goods and services to satisfy their needs and wants. It covers what they buy, why, when, how, where and how often. Consumer behavior involves mental, emotional and physical activities.

3 0
3 years ago
Which of the following would you list as an "Essential (Fixed)" expense?
11Alexandr11 [23.1K]

Out of the above choices I would Asnwer. D Rent. Rent is an Essential (fixed) expense. The other expenses electricty, telephone and car repair are all variable expenses because they normally are net set rates every month. Due to the changng of amounts these expenses fluxtuate not allowing thme to be a fixed expense like rent is.

4 0
3 years ago
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Suppose two economists are debating a tax reform bill. Both economists agree that the bill would increase the after-tax income o
valentina_108 [34]

Answer:

d) Differences in values.

4 0
3 years ago
Muffin’s Masonry, Inc.’s, balance sheet lists net fixed assets as $18.00 million. The fixed assets could currently be sold for $
jeyben [28]

Answer:

                                     Book Value                          Market Value

Current Assets              $14 m                                        $14.95 m

Fixed Assets                  $18 m                                        $27 m

Total                               $32 m                                        $41.95 m

Explanation:

For book Value:

Net fixed assets=$18.00 million

Current Liabilities=$7.50 million

net working capital=$6.50 million

Formula:

Net working capital=Current assets-Current Liabilities

$6.50 million=Current assets-$7.50 million

Current Assets=$6.50+$7.50

Current Assets=$14 million

Total Assets=Net fixed assets+Current Assets

Total Assets=$18 m+$14 m

Total Assets=$32 m

For Market Value:

Net fixed assets=$27.00 million

Current Liabilities=$7.50 million

net working capital=$7.45 million

Formula:

Net working capital=Current assets-Current Liabilities

$7.45 million=Current assets-$7.50 million

Current Assets=$7.45+$7.50

Current Assets=$14.95 million

Total Assets=Net fixed assets+Current Assets

Total Assets=$27 m+$14.95 m

Total Assets=$41.95 m

                                     Book Value                          Market Value

Current Assets              $14 m                                        $14.95 m

Fixed Assets                  $18 m                                        $27 m

Total                               $32 m                                        $41.95 m

8 0
3 years ago
Steve Conyers and Chelsy Poodle formed a partnership, dividing income as follows: Annual salary allowance to Poodle of $146,160.
Ahat [919]

Answer:

Conyers = $38,580

Poodle = $222,420

Explanation:

Annual salary allowance to Poodle of $146,160.

Interest of 6% on each partner's capital balance on January 1.

Any remaining net income divided to Conyers and Poodle, 1:2.

net income $261,000

distribution of interests:

  • Conyers = $54,000 x 6% = $3,240
  • Poodle = $93,000 x 6% = $5,580

drawings (annual salary allowance):

  • Poodle = $146,160

remaining income = $261,000 - $146,160 - $3,240 - $5,580 = $106,020

  • Conyers (1/3) = $35,340
  • Poodle (2/3) = $70,680

total distributed:

  • Conyers = $3,240 + $35,340 = $38,580
  • Poodle = $5.580 + $146,160 + $70,680 = $222,420
6 0
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