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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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1 year ago
Elsem Foods Inc. is a company that manufactures packaged food. It sells several varieties of packaged food such as chips, cupcak
valentina_108 [34]

Answer:

Orange juice, apple juice, cranberry juice, and lychee juice are all product items of Elsem Foods.

Explanation:

A product item is a specific type or variety of product that is different than other products that a company sells.

In this case orange, apple, cranberry and lychee juices are all product items which are part of the tropical fruit juices product line of Elsem Foods.

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3 years ago
In the small country of Economerica, there are 6 thousand people employed, 1 thousand people unemployed, and 3 thousand people o
irakobra [83]

Answer: B. 20.00%

Explanation:

Unemployment rate does not include those who have given up on finding a job.

Unemployment rate = Unemployed people / Labor force

Unemployed people:

= Original unemployed + half the new graduates

= 1,000 + (1,000 / 2)

= 1,500 people

Labor force:

= Unemployed + employed people

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3 0
2 years ago
Logan and Johnathan exchange land, and the exchange qualifies as like kind under § 1031. Because Logan's land (adjusted basis of
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Answer:

a. Logan's recognized gain is $38,600

b. Logan's recognized gain is $23,160

Explanation:

a. If the worth of the land for Jonathan is $183,350, then the gain recognized by Logan would be;

the lower of the realized gain between the amount realized of $231,600 - adjusted basis of $193,000 = $38,600

or the fair market worth of the received boot i.e $48,250.

Therefore, Logan's recognized gain is $38,600

b. Suppose Jonathan's land is worth, $208,440, then we can calculate Logan's recognized gain to be ;

the lower of the realized gain I.e amount realized of $231,600 - adjusted basis $193,00 = $38,600

or the fair market value of the received boot I.e $23,160 .

Therefore, Logan's recognized gain is $23,160

6 0
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