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
James Company began the month of October with inventory of $32,000. The following inventory transactions occurred during the mon
NARA [144]

Answer

The answer and procedures of the exercise are attached in the following archives.

Explanation  

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

Download xlsx
3 0
3 years ago
Name at least two primary forms of identification needed to obtain a learners license
Elza [17]
Two primary forms you could use would be 1. Birth certificate and 2. Social security card.
4 0
3 years ago
20 POINTS !!!!! Based on your budget, which transportation option is the best financial decision for you? Explain your answer in
patriot [66]
Engenuity said to have

1. Option A is not the best choice, because the monthly payments will be too high.

2. Option B is not a good choice, because it requires too high of an up-front cost, and the mileage restriction might be a problem.

3. Option C is the best choice for my budget, and it will allow me to own a car outright once the loan is repaid.
5 0
3 years ago
Read 2 more answers
Source: Tommy Stubbington and Ben​ Edwards, open double quoteU.K. to Repay First World War ​Bonds,close double quote Wall Street
xxMikexx [17]

Answer:

Follows are the solution to this question:

Explanation:

Its console shall be coordinated effort mutual funds which do not grow at all, and in every year they create a corrected degree of interest, that's why Its bond paying a fixed rate of the coupon but not maturing.

\text{Consolation price} =\frac{\text{Set amount of coupon}}{\text{Return Rate}}

                            = \frac{35}{2.5\%} \\\\ = \frac{35\times 100}{2.5} \\\\   = \frac{35\times 1000}{25} \\\\  = \frac{7\times 1000}{5} \\\\  = 7\times 200 \\\\= 1400

It's the price that the government needs to offer shareholders.

5 0
3 years ago
Marketing manager Ricki Stephens reviewed her marketing information system to learn who was buying her company's products and at
Rudik [331]

Answer:

Letter A is correct. <em>Data warehouse.</em>

Explanation:

Data warehouse acts as a digital data warehouse of the company, whose main purpose is to store relevant information about the organization so that through history it can provide reports that help the company in the decision making process according to the facts found.

The biggest benefits found in the database system are greater flexibility and control of information and research, and the creation of standards that correct data and coordinate and optimize system data to ensure greater effectiveness.

7 0
3 years ago
Other questions:
  • A price floor is Group of answer choices often imposed when sellers of a good are successful in their attempts to convince the g
    9·1 answer
  • Aragon Company has just received the August 21, 2010 bank statement, which is summarized below.
    15·1 answer
  • In the 1960s, a popular ad stated that "blondes have more fun!" this is an example of ______.
    7·1 answer
  • One of the most important ingredients in bubble tea is the tapioca pearls that are added to the tea. If the price of tapioca flo
    8·1 answer
  • What is the purpose to draw up budgets in a business?
    11·2 answers
  • The Burgers 4 Upper U Restaurant Group supplies its franchise restaurants with many​ pre-manufactured ingredients​ (such as bags
    11·1 answer
  • Xyz corporation has suffered a major downturn in business and will not be able to pay interest on its bonds. this is an example
    12·1 answer
  • Why should you treat savings as an expense in your budget?
    15·1 answer
  • When will nekos be created?
    7·2 answers
  • Preparing job order costing journal entries
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!