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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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In your own words, discuss GAP management and then suggest a way to reduce the impact of its limitation. Do not duplicate limita
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Explanation:

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Answer:

                                      2019        2018     2017      2016     2015

Sales                              362           237      192         134        100

Cost of goods sold       365           238      195         135        100

Accounts receivable    254           202       191          114        100

Explanation:

Note: See the attached excel file for the table showing how the trend percents are calculated.

Trend percents, often known as index numbers, can be described as percents that are used for comparing financial data across time to a based year or period. This can be calculated using the following formula:

Trend percents = (Analysis year amount / Base year amount) * 100 ........ (1)

Using equation (1), the following table shows the trend percents computed as follows:

                                     2019         2018     2017      2016     2015

Sales                              362           237       192         134        100

Cost of goods sold       365           238       195         135        100

Accounts receivable     254           202       191          114        100

Download xlsx
4 0
3 years ago
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Answer:

Promissory estoppel

Explanation:

Promissory estoppel means that in legal tenet that a promise or pledge can be enforced by law, actually if formulated without legal consideration, if the George now the (promisor) has made a pledge to a Susy the (promises) who then depends on that promise for a subsequent detriment. So what Promissory estoppel is expected to do is to stop the (George) promisor from insisting that an underlying promise should not be legally authorized or implemented. So Susy can sue George on the basis of promissory estoppel and get a reward for George's disappointment

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3 years ago
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