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just olya [345]
3 years ago
9

3. Suppose you are thinking of purchasing the Moore Co.’s common stock today. If you expect Moore to pay $3.1, $3.38, $3.70, $4.

02, and $4.38 dividends at the end of year one, two, three, four, and five respectively and you believe that you can sell the stock for $95 at the end of year five. If you required return on this investment is 11%, how much will you be willing to pay for the stock today?
Business
1 answer:
BlackZzzverrR [31]3 years ago
8 0

Answer:

$69.87

Explanation:

The price i would be willing to pay for the stock can be determined by finding the present value of the dividend payments

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow in year 1 = 3.1

Cash flow in year 2 = 3.38

Cash flow in year 3 = 3.70

Cash flow in year 4 = 4.02

Cash flow in year 5 = 4.38 + 95 = 99.38

I = 11%

Present value = $69.87

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

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<u>Explanation:</u>

Since the price of the product all alone is $450 and the price of the service alone is $550, so the combined amount totals up to be nothing less than $1000. But the company under the discount and offer, offers the both things combined for $800.

This shows that the company is under some loss which it has to incur. The loss is of $200 under the discount to be offered to the clients which serves as the incentive to the customers.

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3 years ago
Use the compound interest formula to determine the accumulated balance after the stated period. ​$60006000 invested at an APR of
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Answer:

The final value of the investment after 3 years is $7,146.10

Explanation:

Giving the following information:

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To calculate the final value, we need to use the following formula:

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FV= 6,000*(1.06^3)

FV= $7,146.10

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3 0
3 years ago
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Answer:

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Explanation:

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2 years ago
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Answer:

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8 0
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Answer:

<em>Explained below !</em>

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