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
Sedaia [141]
3 years ago
8

A company paid an annual dividend of $.40 a share last month and plans to increase the dividend by 7 percent a year for the next

6 years and then increase it by 4 percent annually thereafter. What is the value of this stock at the end of Year 6 if the discount rate is 11 percent
Business
1 answer:
Likurg_2 [28]3 years ago
5 0

Answer:

P6 = $8.918626 rounded off to $8.92

Explanation:

The DDM will be used to calculate the price of the stock. 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 = D0 * (1+g) / (r - g)

Where,

  • g is the constant growth rate
  • D0 is the dividend paid today or most recently
  • r is the required rate of return

As we use D0 * (1+g) or D1 to calculate the value of the stock today (P0), we will use D7 to calculate the value of the stock 6 years from now.

D7 = 0.4 * (1+0.07)^6 * (1+0.04)

D7 = $0.6243038264

P6 = 0.6243038264 / (0.11 - 0.04)

P6 = $8.918626 rounded off to $8.92

You might be interested in
If the Netherlands enjoys comparative advantage in the production of dairy products, it implies that the opportunity cost of pro
sladkih [1.3K]

Answer:

False

Explanation:

A country has comparative advantage in production if it produces at a lower opportunity cost when compared with its trading partners.

I hope my answer helps you

7 0
3 years ago
How can you differentiate between various economic systems that exist
liubo4ka [24]

Answer:

An economic system is defined by the way scarce resources are distributed in an economy.

There are 4 types of major economic systems which are following;

  1. A mixed economy is an economic system, like its name is a mix of elements of planned economies, free markets with intervention of the state and public enterprises.
  2. A command economy is a system where the government is key decision maker of what goods and services will be produced and introduced by the economy.
  3. A market economy is the one in which the investment, production and distribution are dictated by the forces of demand and supply.
  4. A traditional economic system is a result of customs, history and cultural norms which include the rules and manner of their distribution as well.
3 0
3 years ago
The next day kade opens the letter in order to proofread it. he realizes that there is some formatting in part of the letter tha
dedylja [7]
After using the format painter, he wants to turn it off. The key he should press is the Esc key.  It is f<span>ound on most computer keyboards and used for any of various functions, as to interrupt or cancel the current process or running program, or to close a pop-up window.</span>
8 0
3 years ago
What are some of the Miranda restrictions on questioning someone?
Veseljchak [2.6K]

"Miranda rights" require that police inform you that you have the right to remain silent, that anything you say can be against you in court, you have the right to have a lawyer present for questioning, and if you cannot afford a layer the court can appoint one for you.

3 0
3 years ago
A 3/1 ARM is made for $150,000 at 7% with a 30 year maturity. Assuming that fixed payments are to be made monthly for three year
sveticcg [70]

Answer:

Monthly paymenty for  $ 997.954

Explanation:

We have to calcualte for the PTM of the mortgage for the first three years at which the rate is fixed:

PV \div \frac{1-(1+r)^{-time} }{rate} = C\\

PV $150,000

time 360 (30 years x 12 months)

rate 0.005833333 (7% annual / 12 months)

150000 \div \frac{1-(1+0.005833)^{-360} }{0.005833} = C\\

C  $ 997.954

8 0
3 years ago
Other questions:
  • Common ways to be generative include caregiving, employment, and _____. goal-setting exercises parenthood travel financial secur
    8·1 answer
  • "stars" are one of the four types of employees based on the degree of organizational commitment and task performance. "stars" ar
    9·1 answer
  • This method of calculating gdp, which involves summing thevalue added at each stage of production , is called theexpenditure app
    11·1 answer
  • What is buying and selling?​
    9·2 answers
  • When sending a resume to companies without seeing a job opening, it's best to send the same ones out
    7·2 answers
  • 1. Describe the four management functions and the type of management activity associated with each.
    10·1 answer
  • Grjgdxgrd hdjgiktn rjgrjgnrf
    12·2 answers
  • Kelly Company sells its only product for $250 per unit. It has variable costs of $90 per unit. Annual fixed operating costs amou
    12·1 answer
  • What is a LinkedIn InMail?
    9·1 answer
  • matching question match the method of depreciation to the respective definition. declining balance declining balance drop zone e
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!