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sleet_krkn [62]
3 years ago
15

A stock is expected to pay dividends of $1.20 per share in Year 1 and $1.35 per share in Year 2. After that, the dividend is exp

ected to increase by 2.5% annually. What is the current value of the stock at a discount rate of 14.5%
Business
1 answer:
Lady bird [3.3K]3 years ago
4 0

Answer:

$10.8734

Explanation:

The computation of the current value of the stock is shown below:

D1 = $1.20

D2 = $1.35

D3 = 1.35 × 1.025 = 1.38375

g = 2.5% = 0.025

Now as we know that

P2 = D3 ÷ (r - g)

where,

Price in year 2 = P2 = $1.38375 ÷ (0.145 - 0.025)

= $11.53125  

So Current Price is

= $1.20 ÷ 1.145 + $1.35 ÷ 1.145^2 + $11.53125 ÷ 1.145^2

= $10.8734

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<h3>What is Interest Rate? </h3>

This refers to the amount of money that is added to be paid back on the settlement of a loan.

Hence, we can see that after the federal reserve buys bonds, the interest rate changes and aggregate expenditures change, thus will cause the price level in the economy will rise and the money demand will decrease

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6 0
2 years ago
Whether a deliberate choice by a leader, or ostracized by the organization, __________ are sequestered from the rest of the comp
tatiyna
The answer is D)<span> Insulating teams – (example--the scientific team that developed the atomic bomb)
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5 0
4 years ago
Pls help it’s due tomorrow!
maria [59]

Answer:

A. Contact Information for Refrences.

Explanation:

Hi there! To me it makes the most sense because it has nothing to do with a carrer plan. Sure, refrences are benefical but they do not determine what can help you grow and succed in the workforce.

I hope this helps! Good luck! :)

4 0
3 years ago
Which of the following events (in the marketplace or within the company itself) will decrease the market price of Marvelous Manu
hram777 [196]

Answer:

The beta on Marvelous’ common stock decreases from 1.4 to 1.2

Explanation:

According to the scenario, computation of the given data are as follow:-

As we know that

Expected Return = Market Risk Premium × Beta + Risk Free Rate

If the Beta is decreased, this means that expected return is decreased too, and if the expected return decreases the market value is decreases too.  

According to the analysis, The Beta on marvelous’ common stock decreases from 1.4 to 1.2 is correct option.

5 0
4 years ago
Look at the two tables below. What is the total surplus if Bob buys a unit from Carlos? If Barb buys a unit from Courtney? If Bo
makvit [3.9K]

Answer:

$13

$9

Explanation:

Total surplus is the sum of consumer surplus and producer surplus.

Consumer surplus is the difference between the willingness to pay of a consumer and the price he pays for the good.

Consumer surplus = willingness to pay - price of the good

Producer surplus is the difference between the least amount a seller is willing to sell his product and the price he sells the product.

Producer surplus = price of the good - least price the seller is willing to sell his product

Total surplus = consumer surplus + producer surplus

Total surplus = willingness to pay - price of the good + price of the good - least price the seller is willing to sell his product

Prices cancel out

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A. Total surplus = $18 - $5 = $13

B. Total surplus = $16 - $7 = $9

I hope my answer helps you

7 0
3 years ago
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