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
Svet_ta [14]
2 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]2 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

You might be interested in
One example of a job benefit is:
Elden [556K]

Answer:

c

explanation:

5 0
2 years ago
Read 2 more answers
A particular city has an asian population of 1419 people, out of a total population of 23,609. conduct a goodness of fit test at
lions [1.4K]
Given that a<span> particular city has an asian population of 1419 people, out of a total population of 23,609.

To conduct a goodness of fit test at the 5% level to determine if the self-reported sub-groups of asians are evenly distributed.

Since, the parameter of interest is 'if the self-reported sub-groups of asians are evenly distributed', thus the null hypothesis is "the self-reported sub-groups of asians are evenly distributed".</span>
3 0
3 years ago
Suppose you buy a home and borrow $176,000 using a 30 year mortgage with an annual interest rate of 3.20% (compounded monthly).
kipiarov [429]

Answer:

Explanation:

Rate of interest =  3.2 / 12 = .266667

No of terms = 12 x 30 = 360

amount = 176000

PMT = $ 761.14

Now the instalment is increased by 10% so

the instalment becomes = 761.14 + 76.11

= #837.25

No of years required from table

= 25.74 years.

5 0
3 years ago
Which statement about demand is true?
NISA [10]

Answer:

B. the demand for a product and its price has a direct relationship

Explanation:

demand comes from the price which ultimately effects the proportions with the consumers purchasing the product. if the product is good enough with a fair price to come with it, the demand will increase, or if a product becomes more scarce the demand for it will increase along with the price raising.

3 0
2 years ago
You have researched your dream around-the-world vacation and determined that the total cost of the vacation will be $33,000. You
My name is Ann [436]

Answer:

Explanation:

What 22

6 0
2 years ago
Other questions:
  • Bledsoe Corporation has provided the following data for the month of November: Inventories: Beginning Ending Raw materials $ 25,
    5·1 answer
  • What groups are especially hard hit by poverty?
    12·1 answer
  • Which of the following statements is FALSE?
    12·1 answer
  • The Economic Research Service of the U.S. Department of Agriculture provides information on topics from how many dairies there a
    5·1 answer
  • Which is the most accurate statement about trade?
    5·1 answer
  • When Jerry started his small appliance manufacturing company in the 1950s, every component part was made in the USA and the prod
    9·2 answers
  • Which of the following is most correct:Question 8 options:A firm with financial leverage has a larger equity multiplier than an
    10·1 answer
  • Suppose when you are 21 years old, you deposit $1,000 into a bank account that pays annual compound interest, and you do not wit
    7·2 answers
  • Why do you think<br> Relationship skills are<br> important when you own a<br> business?
    9·1 answer
  • At an annual effective interest rate of 6.3%, an annuity immediate with 4N level annual payments of 1,000 has a present value of
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!