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Alecsey [184]
3 years ago
10

Pharsalus Inc. just paid a dividend (i.e., D0) of $ 2.69 per share. This dividend is expected to grow at a rate of 3.8 percent p

er year forever. The appropriate discount rate for Pharsalus's stock is 14.3 percent. What is the price of the stock
Business
1 answer:
maks197457 [2]3 years ago
3 0

Answer:

P0 = $26.5925 rounded off to $26.59

Explanation:

Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,

P0 = D0 * (1+g) / (r - g)

Where,  

D0 is the dividend paid  recently

D0 * (1+g) is dividend expected for the next period /year

g is the growth rate

r is the required rate of return or cost of equity

P0 = 2.69 * (1+0.038)  /  (0.143 - 0.038)

P0 = $26.5925 rounded off to $26.59

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Answer:

A. the markets cannot be allocationally efficient

Explanation:

If the U.S. capital markets are not informationally efficient, the markets cannot be allocationally efficient

5 0
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You are doing some analysis on the has a market value that is equal to its book value. Currently, the firm has excess cash of $1
ikadub [295]

Answer:

the new earnings per share will be 231 cents

Explanation:

Earnings per share is Earnings attributable to each Common Share.

Earnings Per Share = Earnings attributable to Holders of Common Stock/ Weighted Average Number of Common Shares

                                = $1,575 million/ (700 million-250/10000×700 million)

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8 0
3 years ago
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One advantage of using a credit card is
alex41 [277]

Answer:

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6 0
4 years ago
Switzer, Inc. has 8 computers which have been part of the inventory for over two years. Each computer cost $600 and originally r
USPshnik [31]

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3 0
3 years ago
Adams Company sells a product whose contribution margin is $10 and selling price is $25.
Karolina [17]

Answer:

answer is b) False

Explanation:

given data

contribution margin = $10

selling price = $25

total fixed costs = $500

break-even point  = 100 units

solution

we get here Break even point that is

Break even point = \frac{fix\ cost}{contribution\ margin}   ...........1

Break even point = \frac{500}{10}

Break even point = 50 units

but we have given break-even point is 100 units

so answer is b) False

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3 years ago
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