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Svet_ta [14]
3 years ago
7

g ABC common stock is expected to have extraordinary growth in earnings and dividends of 21% per year for 2 years, after which t

he growth rate will settle into a constant 4%. If the discount rate is 14% and the most recent dividend was $4, what should be the approximate current share price (in $ dollars)
Business
1 answer:
inna [77]3 years ago
3 0

Answer: $49.87

Explanation:

Based on the information given,

D1 = $4 × (100% + 21%) = $4 × 1.21 = $4.84

D2 = $4.84 × 1.21 = $5.8564

Value after year 2 will be:

= (D2 × Growth rate) / (Discount rate -Growth rate)

= ($5.8564 × 1.04) / (0.14 - 0.04)

= $6.09/0.1

= $60.9

Then, the current share price will be:

= 4.84/1.14 + 5.8564/1.14² + 60.9/1.14³

= 4.25 + 4.51 + 41.11

= $49.87

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Look at the chart displaying the human development index (HDI) worldwide, which is linked to a high standard of living. Based on
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<span>C. The HDI varies less in countries below the equator than those above the equator. </span>
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Usually, marginally attached workers refers to individuals who are not actively seeking for a job or employment at a particular point in time,which is the case of both Tim and Bev. However, for an individual to be classed as a marginally attached worker, He or she must be willing and able to work and worked or sought for a job at any point within the last twelve months. Bev has searched for a job within the last year and Tim's environment has very few openings to accommodate employees.

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MNO preferred stock pays a dividend of $2 per year and has a price of $20. If MNO's tax rate is 21 percent, the required rate of
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The required rate of return on its preferred stock is found by using PW = D/R.

<u>Given Information</u>

Dividend per year = $2

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Required rate of return (R) = ?

  • The formula for use to derive the Required rate of return includes PV = D/R, where PW means Present worth, D = Dividend per year and R means Required rate of return.

PV = D/R

$20 = $2 / R

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Therefore,, the required rate of return on the preferred stock is 10%.

In conclusion, the required rate of return on its preferred stock is found by using PW = D/R.

See similar solution here

<em>brainly.com/question/17322679</em>

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2 years ago
A $10,000 face value Treasury bond is quoted at a price of 101.6533 with a current yield of 4.87 percent. What is the coupon rat
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Answer:

D) 4.95 percent

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coupon rate=4.95%

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