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
oee [108]
3 years ago
5

Exercise Bicycle Company is expected to pay a dividend in year 1 of $1.20, a dividend in year 2 of $1.50, and a dividend in year

3 of $2.00. After year 3, dividends are expected to grow at the rate of 10% per year. An appropriate required return for the stock is 14%. The stock should be worth ________ today.
A) $33.00
B) $39.86
C) $55.00
D) $66.00
E) $40.68
Business
1 answer:
prisoha [69]3 years ago
3 0

Answer:

E.  $40.68

Explanation:

The computation of the stock worth today is shown below:

= (Dividend in year 1 ÷ 1 + required rate of return^number of years ) + (Dividend in year 2 ÷ 1 + required rate of return^number of years) + (Dividend in year 3 ÷ 1 + required rate of return^number of years)  + (Dividend in year 3 ÷ 1 + required rate of return^number of years) × (1 + growth rate) ÷ (required rate of return - growth rate)

= $1.2 ÷ 1.14 + $1.5 ÷ 1.14^2 + $2 ÷ 1.14^3 + $2 ÷ 1.14^3 × (1 + 10%) ÷ (14%-10%)

= $40.68

We simply applied the above formula

You might be interested in
All of the following are advantages of having a savings account except
expeople1 [14]

Answer:

Funds held in a savings account are highly liquid

Explanation:

The purpose of a savings account is the assist a customer achieve their saving objectives. A savings account is a secure way of accumulating funds for an intended purpose or keeping money that does not have immediate use.  

Financial institutions that offer savings account limit on withdrawals to help a customer achieve planned saving objective. It means money saved is not accessible at will. Penalties apply should a customer insists on more than the acceptable number of withdrawals.

5 0
3 years ago
Darren has borrowed $100$ clams from ethan at a $10\%$ simple daily interest. meanwhile, fergie has borrowed $150$ clams from ge
Oxana [17]

Answer:

20

Explanation:

start doing math

7 0
2 years ago
The situation where one person's demand for a good depends on the consumption of the good by others is called a
ehidna [41]

Answer:

Network externality is the correct answer.

Explanation:

7 0
3 years ago
What is the term that defines how recently a customer purchased items?
KatRina [158]
The answer is recency. This part of the RFM model. It is a marketing investigation tool used to classify a firm's best customers by calculating definite factors.

The RFM model is founded on three quantitative factors which are:

Recency - How recently a customer has made an acquisition or purchase of productFrequency – How frequent or often a customer makes a purchaseMonetary Value - How much cash a customer spends on purchases

RFM analysis often sustains the marketing saying that "80% of business comes from 20% of the customers."
6 0
3 years ago
All of the following statements are true with regard to qualifying business losses EXCEPT: The loss will reduce any other curren
avanturin [10]

All of the following statements are true with regard to qualifying business losses EXCEPT: Qualifying losses from 2017 were carried forward to the taxpayer's 2018 tax return.

Explanation:

The loss would reduce any other eligible income of the applicant for the current year. An investor shall recover the QBI from various trades or businesses, including damages.

Upon deduction of all qualified company gains for the current year, the excess of the income shall be rolled forward to the next tax year. The unfavorable balance shall be shifted into the next fiscal year.

If the loss was incurred after 2018, the excluded or lost element is included in QBI and would otherwise be included in QBI, but is included in taxable income not until the year.

4 0
3 years ago
Other questions:
  • One of the primary causes of non-conforming supplier quality involves inconsistent communication and the resultant mis-understan
    13·1 answer
  • Which of the following is a common factor of failure for small businesses?
    13·2 answers
  • An equal partnership is formed by Rita and Gerry. Rita contributes cash of $10,000 and a building with a fair market value of $1
    9·1 answer
  • Which of the following is correct?
    7·1 answer
  • The marginal product of labor is the:
    13·1 answer
  • Elasticity is a. a measure of how much buyers and sellers respond to changes in market conditions. b. the study of how the alloc
    12·1 answer
  • Tanek Corp.'s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company's income statem
    10·1 answer
  • Bob got a 30 year Fully Amortizing FRM for $1,500,000 at 4%, except with non-constant payments. For the first 2 years Bob will p
    5·1 answer
  • Assume that Amazon sells the MacBook Pro, a computer produced by Apple, for a retail price of $1,500. Amazon arranges its operat
    15·1 answer
  • Earnings per share should always be shown separately for:.
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!