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olasank [31]
4 years ago
15

A start-up will not pay any dividends for 3 years. At the end of the third year, it is expected to pay a dividend of $0.30. This

dividend should then grow at a rate of 12% for 6 years, and at a reduced rate of 6% thereafter. The market required rate of return for similar high growth start-up companies is 16%. Estimate the price of the company's shares today.
Business
1 answer:
Natalka [10]4 years ago
6 0

Answer:

The price of share at today is $1.724.

Explanation:

- First, calculate the present value of the estimated value of the dividend stream from end of Y3 to end of Y9 using growing annuity formula:

[0.3/ ( 0.16 -0.12)] x [ 1 - [ (1+0.12)/(1+0.16) ] ^6 ] x (1/1.16^2) = $1.058

- Second, calculate the Dividend receipt at the end of year 10 which is 0.3 x 1.12^6 x 0.94 = $0.557

- Calculate the present value of the dividend stream after Y9 which is a perpetuity:

[ 0.557/ ( 0.16 - (-0.06) ] x (1/1.16^9) = $0.666

- The stock price is equal to the sum of the present value of the two dividend streams calculated above = 1.058 + 0.666 = $1.724.

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Volgvan

Answer:

Explanation:

A professional buyer usually has uses many different tactics in a meeting/negotiation in order to get the best price possible or a price that largely favors them as a buyer. Two of these tactics would be to point out negative aspects of the asset being sold while another one would be a take-it-or-leave-it offer. With both of these tactics, the buyer tries to make the asset seem as not worth its asking price and then with the offer, the buyer is making it seem as though the seller will not receive a better offer and tries to make them accept the offer out of fear of missing out on the sale. Personally, the best way I would respond to both of these tactics would be to continuously point out the positive aspects of the asset and stay firm to your initial/needed price point.

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3 years ago
The three industrialized nations that do not provide paid maternity leave by law are Select one: a. Canada, Italy, and Japan. b.
stellarik [79]

Answer:

b. Australia, Swaziland, and the United States.

Explanation:

The three industrialized nations that do not provide paid maternity leave by law are Select one: Australia, Swaziland, and the United States.

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3 years ago
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Given the following information concerning a convertible bond:
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8 0
3 years ago
Bruno’s Gelato Café has a fixed cost of $100. The variable cost of producing 10 gelatos is $20, and the variable cost of produci
WINSTONCH [101]

Answer:

TC = $122, MC = $22

Explanation:

Total cost = Fixed cost + Variable cost

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