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vredina [299]
3 years ago
13

A stock is currently selling at 80 per share to yield an annual nominal interest rate of 10%, compounded semi-annually. The stoc

k is expected to pay dividends at the end of each year forever. The next dividend (payable one year from now) is 2 and is expected to increase at a rate of X% per year. Calculate X.
Business
1 answer:
Leni [432]3 years ago
5 0

Answer:

X is 7.75%

Explanation:

The yield on a stock is determined by dividend and stock appreciation in the market.

First, we need to calculate the effective annual yield

Effective annual yield = ( 1 + Nominal interest rate/periods per year )^numbers of compounding periods annually - 1

Effective annual yield = ( 1 + 10%/2 )^2 - 1

Effective annual yield = 1.1025 - 1

Effective annual yield = 0.1025

Effective annual yield = 10.25%

Now use the following formula to calculate the X

Price of the share = Expected dividend / ( Effective annual yield - Growth rate )

Where

Price of share = 80

Expected Dividend = 2

Effective annual yield = 10.25%

Growth rate = X

Placing values in the formula

80 = 2 / ( 10.25% - X )

0.1025 - X = 2 / 80

0.1025 - X = 0.025

-X = 0.025 - 0.1025

-X = -0.0775

X = 0.0775

X = 7.75%

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wolverine [178]

Answer:

Number of units that must be sold to earn the target profit is 3000 units.

The contribution margin ratio is 0.70

Explanation:

We will use the break even analysis modified for target profit to calculate the number of units needed to earn the desired

The break even point in units is calculated by dividing the fixed cost by the contribution margin per unit. To calculate the number of units required to earn the desired profit, we add the desired profit to fixed cost and divide it by the contribution margin per unit.

Contribution margin per unit = 250 - 75  =  $175

Number of units required to earn target profit = (325000 + 200000) / 175

Number of units required to earn target profit = 3000 units

The contribution margin ratio is = 175 / 250   =  0.7 or 70%

Dollar Sales required to earn target profit = $4,812,500

8 0
3 years ago
Which of the following would be a balanced set of measures for any given project?A. Input measures, process measures and output
Inga [223]

Answer:

A. Input measures, process measures and output measures

Explanation:

A project should have all of the following measures.

Input Measures

To ealuate the performance of the project we should measure the resource being used in the project.

Process Measure

In processing phase we should have controls over the resource to get the required output.

Output measure

We should measure the output that a process gives after processing on the resources being input in the process.

6 0
3 years ago
In August 2019, U.S. corn futures hit a three-month low after China said it would impose additional tariffs on U.S. grain produc
const2013 [10]

Answer:

Option C (The convenience.............downwards) is the correct choice.

Explanation:

  • Throughout this circumstance, the convenient yield would maintain the very same, although the curve amount or rate will change downwards since it is a transient trading strategy, but perhaps the effects will be negative and then it will proceed to something like a downward shift throughout the convenience curve.
  • The yielding of convenience might maintain the same because, but perhaps the curve degree may change downwards.

All other decisions are not linked to the circumstance issued. So, the alternative here is the right one.

7 0
2 years ago
Roads that function as expressways and divided highways have high speeds and greater risk of _________ crashes.
dimaraw [331]

Answer: High-impact crashes

Explanation:

High impact crashes are automobile crashes, that occurs at very high speeds and has a high likelihood to cause injuries and in some cases death to passengers of vehicles or pedestrians around.

Expressways and divided highways are roadways where vehicle drivers are allowed to drive at high speeds, therefore increasing the chances of high impact crashes occuring.

6 0
3 years ago
Which of the following options strategies would be best for an investor interested in maintaining his long position in the marke
9966 [12]

Answer:

buying puts

Explanation:

A put option is a sale option. It gives the buyer the right (but not the obligation) to sell an asset in the future to the seller of the option at a previously determined price.

The owner or buyer of a put option benefits from the option if the underlying asset falls, that is, if when the put option expires, the asset (a share for example) has a price lower than the agreed price . In that case, the option buyer will exercise his right and sell the asset at the agreed price and then buy it at the current market price, earning the difference.

If the price turns out to be higher than the agreed price, known as the strike or strike price, the buyer will not exercise his right and will simply have lost the premium he paid to acquire the option. Therefore, your benefit may be unlimited, but your loss is limited to the premium you paid.

8 0
3 years ago
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