Answer:
Price of stock = $74.636
Explanation:
<em>The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return. </em>
<em>The price of the stock will the sum of the present value of the growing annuity and the growing perpetuity</em>
<em>Present value of dividend from year 1 to 8</em>
The PV of the growing annuity = A/r-g) ( 1- (1+g)/(1+r)^n )
<em>A- dividend payable now , r- required of return, g-growth rate, number of years</em>
PV = 1.52×(1.19)/(0.1-0.19) × (1 -(1.19/1.1)^8)= 17.605
<em>PV of Dividend from year 9 and beyond:</em>
<em>P = D× g/(r-g) </em>
<em>This will be done in two steps:</em>
Step 1: PV(in year 8)of dividend = (1.52× 1.19^8× 1.05)/(0.1-0.05)= 122.250
Step 2 : PV in year 0 = 122.25× 1.1^(-8)= 57.030
Price of stock = 17.60 + 57.030= 74.63
Price of stock = $74.636
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Answer:
The correct answer to the following question will be "decide whether a public issue is fairly priced
".
Explanation:
- SEC seems to be an autonomous federal department of government responsible for protecting creditors, ensuring the equal and organized operation of financial markets as well as promoting the creation of capital.
- It's being used to control trading in commodities, debt securities and therefore does not determine if the global outrage is legitimate.
So that the above is the right answer.
Answer:
Explanation:
a. QXd = 1,200 – 3PX – 0.1PZ
Pz = $300 and Px = $140, plugging the values, we get,
Qx = 1200 – 3*140 – 0.1*300.
Qx = 750 units.
Elasticity of demand = \deltaQx/\deltaPx * Px/Qx.
\deltaQx/\deltaPx = -3.
E = -3 * 140/750.
E = -0.56
The elasticity of demand is INELASTIC because the absolute value of elasticity is less than one. If the firm charges a price below $140it might lose out in revenue because the percentage change in demand is less than the price.
b. Px = $240, substituting this into the equation we get
Qx = 1200 – 3*240 – 0.1*300
Qx = 450 units.
E = -3 * 240/450.
E = -1.6
The demand is elastic because the absolute value is less than one. If the firm charges a price above $240 it might lose out on its revenue because the percent change in demand is more than the price.
c. Cross price elasticity of demand Es = \deltaQx/\deltaPz * Pz/Qx.
\deltaQx/\deltaPz = -0.1
Es = -0.1 * 300/750.
Es = -0.04
The goods are complements of each other. As the price of one increases, the demand for other would fall, and vice-versa is true.