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Sergeeva-Olga [200]
3 years ago
11

Nuclear Inc. just paid a $2.75 dividend. Dividends are expected to grow by 30% in year 1, by 25% in year 2, and by 25% in year 3

. After this, dividends are expected to grow at constant rate of 5% per year. If the required return for this stock is 9%, how much should the stock sell for today
Business
1 answer:
Andrei [34K]3 years ago
7 0

Answer:

$124.58  

Explanation:

Year 1 dividend=$2.75*(1+30%)=3.575

Year 2 dividend =3.575 *(1+25%)=4.46875

Year 3 dividend=4.46875 *(1+25%)=5.5859375

Termina value=Year 3 dividend*(1+constant growth rate)/(required return-constant growth rate)

Termina value=5.5859375 *(1+5%)/(9%-5%)=146.6308594

stock price=3.575 /(1+9%)^1+4.46875 /(1+9%)^2+5.5859375 /(1+9%)^3+146.6308594 /(1+9%)^3

stock price=$124.58  

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Zoom sales last year were $435,000, its operating costs including Depreciation were $362,500, and its interest charges were $12,
Ostrovityanka [42]

Answer:

374,000

Explanation:

because 362,500 plus 4,000 equals 364,500 add the last 10,000 and you have 374,500 add the 500 and now you have 375k

8 0
3 years ago
Which of the following chain-of-command systems was developed to address the need to combine specialization with management cont
Lana71 [14]

The answer may possibly be line-and-staff organization.

3 0
3 years ago
When companies purchase technology from Conversica to reduce the variability of the human component of their service offerings,
pshichka [43]

Answer:

Companies purchase technology to reduce the variability of the human component of their service offerings.  When they do this, they are dealing with the fundamental difference of  heterogeneity of services marketing.

Explanation:

Service offerings are never the same.  However, the presence of technology reduces this variability (heterogeneity) caused by the human component.  The other fundamental differences between goods and service offerings are intangibility, inseparability, and perishability.

8 0
3 years ago
The Rhaegel Corporation’s common stock has a beta of 1.2. If the risk-free rate is 4.3 percent and the expected return on the ma
alexira [117]

Answer:

Cost of equity = 14.74%

Explanation:

The capital asset pricing model is a risk-based model for estimating the return on a stock..

Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk.

Systematic risks are those which affect all economic actors in the market, they include factors like changes in interest rate, inflation, etc. The magnitude by which a stock is affected by systematic risk is measured by beta.  

Under CAPM,  

E(r)= Rf + β(Rm-Rf)  

E(r)- cost of equity , Rf-risk-free rate , β= Beta, Rm= Return on market.  

Using this model, we can work out the value of beta as follows:  

β-1.2 Rf- 4.3%, Rm = 13%  

E(r) = 4.3% + 1.2 × (13 - 4.3)%=14.74 %

Expected return = 14.74 %

Cost of equity = 14.74%

8 0
3 years ago
White Company acquires a new machine for $75,000 and uses it in White's manufacturing operations. A few months after White place
Katena32 [7]

Answer:

  • Tax status = Ordinary Asset
  • Gain = $60,000

Explanation:

As the company expensed the asset fully in the year of purchase instead of capitalizing it, the asset is an ordinary asset not a capital one which is capitalized. That is the tax status.

The gain on an ordinary asset is the amount that it was sold for which in this case is $60,000.

Tax status = Ordinary Asset

Gain = $60,000

5 0
3 years ago
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