Answer:
The expected price of the stock is $122.03
Explanation:
To calculate the expected price of the stock at the end of the year or at Year 1, we first need to determine the required rate of return on the stock. We will use the CAPM equation to calculate the required rate of return.
The required rate of return is calculated as,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate
- rM is the return on market
r = 0.05 + 1 * (0.14 - 0.05)
r = 0.14
We already have the price of the stock today, the D1 and the required rate of return. Using the constant dividend growth model of DDM, we calculate the growth rate in dividends to be,
P0 = D1 / (r - g)
115 = 9 / (0.14 - g)
115 * (0.14 - g) = 9
16.1 - 115g = 9
16.1 - 9 = 115g
7.1 / 115 = g
g = 0.0617 or 6.17%
Using the same formula and replacing D1 with D2, we can calculate the price of the stock at the end of the year or at start of Year 1.
P1 = 9 * (1+0.0617) / (0.14 - 0.0617)
P1 = $122.03
Answer:
TIE 6.26238
Explanation:
Times Interest Earned:
EBIT = earnings before Interest and Taxes
Answer:
The correct answer is b. will go primarily to consumers.
Explanation:
Inelastic demand is that demand that is not very sensitive to a change in price. In this way, before a variation in the price the quantity demanded reacts in a less than proportional way. For example, if the price increases by 10% and in response the quantity demanded is reduced by less than 10%, then the demand is said to be inelastic.
While the elasticity of the offer presents the degree of response of the quantities offered to variations in the price of the good considered, the price of other goods, the costs of productive factors or business expectations.
Answer:
Closed shop
Explanation:
A closed shop involves an agreement where the employer only recruits Union members. The workers must remain Union members as long as they work with the employer.
Legality of closed shop varies from country to country.
I'm this instance, Atalanta Industries agrees to hire only those workers who were already members of the Electrical Union. This is a closed shop situation.
Closed shop was declared illegal by the Taft-Hartley act in 1947.
