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Minchanka [31]
3 years ago
6

The next dividend payment by ASAP, Inc., will be $2.00 per share. The dividends are anticipated to maintain a 4.00% growth rate,

forever. If ASAP stock currently sells for $14.75 per share, what is the required return?
Business
1 answer:
Dafna11 [192]3 years ago
7 0

Answer:

r = 0.175593 or 17.5593% rounded off to 17.56%

Explanation:

Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,

P0 = D1 / (r - g)

Where,

  • D1 is dividend expected for the next period /year
  • g is the growth rate
  • r is the required rate of return  

Plugging in the values for D1, P0 and g, we can calculate the value of r to be,

14.75 = 2 / (r - 0.04)

14.75 * (r - 0.04)  =  2

14.75r - 0.59  =  2

14.75r = 2 + 0.59

r = 2.59  /  14.75

r = 0.175593 or 17.5593% rounded off to 17.56%

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Answer:

Developing nations are concerned with commodity price stabilization because of the following reasons

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Explanation:

In recent decades there has been growing concern about the sharp fluctuations of primary product prices, the effects of those fluctuations on particular groups of producers and particular countries, and the measures which might be taken to reduce or offset the fluctuations.

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However, developing nations are concerned with commodity price stabilization because of the two reasons provided above which could result in inflation and deflation.

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3 years ago
Real property taxes are often assessed on the value of the property at the beginning of the year. when property is sold in the m
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The property taxes are based on the assessed value of the property. So when the property tax is pro rated at the time of the transfer, both the buyer and seller can deduct their pro rated portion of the property tax.

Buyer and seller prorations are often applied during real estate closing transactions to divide the cost of expenses like property taxes. Thus, the buyer gets a deduction for the prorated amount of property tax due after closing, and the seller gets the same deduction for the taxes.

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