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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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Complete Question:

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Answer:

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Explanation:

A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.

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Bonds are classified into two (2) main categories and these are;

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2 years ago
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Answer:

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Explanation:

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Budgeted kennel tenant-days = 3,100

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                                        per month        per tenant-day

Revenue                                      -                   $ 34.00        $105,400

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Total expenses                $94,515

Revenue variance for March would be closest to: $1,028 U ($105,400 - $104,372)

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