1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
r-ruslan [8.4K]
3 years ago
14

Phillips Co. is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next three years, with the growt

h rate falling off to a constant 8 percent thereafter. If the required return is 11 percent and the company just paid a dividend of $1.45, what is the current share price
Business
1 answer:
mr_godi [17]3 years ago
8 0

Answer:

$69.47

Explanation:

D1 = ($1.45*1.20) = $1.7

D2 = ($1.7*1.20) = $2.04

D3 = ($2.04*1.20) = $2.45

Value after year 3 = (D3*Growth Rate) / (Required rate-Growth Rate)

Value after year 3 = ($2.45*1.08) / 0.11-0.08

Value after year 3 = $2.646 / 0.03

Value after year 3 = $88.20

Current share price = Future dividend and value*Present value of discounting factor(rate%,time)

Current share price = $1.7/1.11 + $2.04/(1.11)^2 + $2.45/(1.11)^3 + $88.20/(1.11)^3

Current share price = $1.5315315 + $1.65571 + $1.7914189 + $64.49107

Current share price = $69.4697304

Current share price = $69.47

You might be interested in
Price floors and price supports set a minimum price below which a good or service cannot be sold. Minimum wage laws and agricult
Sergeu [11.5K]

Answer:

C. A surplus of agricultural goods

Explanation:

Un-intervened markets are at equilibrium where Market Demand = Market Supply. Market Supply curve is upward sloping, due to price - supply direct relationship. Market demand curve is downward sloping, due to price - demand inverse relationship. Both curves intersect at equilibrium.

Price floor is minimum mandated price by government, below which a good cant be sold in the markets. It is usually set above market price, to protect the interest of sellers. Eg : Minimum Support price, of agricultural goods, set for protecting interests of sellers (farmers) from volatile prices.

This mandate set artificially high price : leads to supply being more than demand, as supply is directly & demand is inversely related to price. So, supply > demand implies that agricultural goods are at surplus in markets.

7 0
3 years ago
Zenith, a popular restaurant chain, has many branches all over the world. The taste and quality of its food is the same across a
lakkis [162]

Answer:

Global marketing standardization

Explanation:

In Global marketing standardization technique  companies or firms try to create the equal standards of product and service globally, In general term Companies make the same quality and quantity of their product or service to create a uniqueness and market establishment.

In this situation, Zenith provides the same machine technology and ingredient for there customer. it is a type of Global marketing technique.

4 0
3 years ago
Tiffany has $5000 of savings in her bank account. What would be different if she had that $5000 invented in stocks instead?
Alex73 [517]
What would be different is The money she has
3 0
3 years ago
John is auditing MegaCorp. He finds an accounts payable for 10,000 cases of ball bearings. He checks to make sure the paper actu
zzz [600]
Your answer is.........B. Vouching.
4 0
3 years ago
Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happe
Alexxandr [17]

Answer:

It would fall

Explanation:

The unemployment rate measures the amount of people who are out of a job for at least 4 weeks, and are actively seeking to find a new job. If a person is not willing or able to search for a job, he/she is not considered unemployed nor part of the labor force.

If unemployed people just quit looking for jobs, the unemployment will decrease even though the number of people who are out a job increases. This happens because as soon as someone quits looking for new job, they are not considered unemployed anymore.

6 0
3 years ago
Other questions:
  • Your broker called earlier today and offered you the opportunity to invest in a security. As a friend, she suggested that you co
    9·1 answer
  • Presented below are three economic events. In each column, indicate whether the event increased, decreased, or had no effect on
    13·1 answer
  • Making a profit by lending money is ____________.<br> a. capital<br> c. usury<br> b. barter
    14·2 answers
  • A group of young patrons come into the venue after a sports event. They are loud and excited, celebrating a win for their team.
    6·1 answer
  • The government can shift or influence supply in a market by providing subsidies (money) to businesses or by taxing them heavily.
    8·1 answer
  • Which of these is the BEST example of a person who is an entrepreneur?
    5·2 answers
  • What accounts for the increase in operating support when an independent business expands by becoming a franchisor?
    6·1 answer
  • Which of the following is not considered a special journal?
    11·1 answer
  • An example of consumer spending when calculating the GDP using the expenditures approach is _____.
    12·1 answer
  • Suppose you have a dinner gift certificate for $20. You can use it to order meatloaf or pot roast. Meatloaf costs $12, and pot r
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!