Ask question

Ask question

All categories

3 years ago

7

Calculate the average growth rate. (Enter your answer as a percentage, rounded to 2 decimal places, using intermediate calculati

ons rounded to at least 4 decimal places.)

1 answer:

KIM [24]3 years ago

6 0

Answer:

Growth rate is 6%

Explanation:

Po = $\frac{D1}{r-g}$

P = 0.3 / (0.1 - 0.06)

P = $75

Dividend growth model is used to calculate the stock price based on the dividend growth.

You might be interested in

The amount of time it takes for an investment to double in value is called the doubling time for the investment. If the doubling

Paul [167]

Answer:

Compounding interest rate, r = 10.41%

Explanation:

As the investment will be doubled after 7 years from now, the future value of the current investment will be = $10,000 × 2 = $20,000

Therefore,

Number of periods (years), n = 7

Future value, FV = $20,000

Principal = Present Value, PV = $10,000

we have to determine the compounding interest rate, r.

We know,

r = $[(\frac{FV}{PV})^{\frac{1}{n}} - 1]$

Putting the values into the formula, we can get,

r = $[(\frac{20,000}{10,000})^{\frac{1}{7}} - 1]$

or, r = $(2^{\frac{1}{7}} - 1)$

With the help of calculator, we can find the value of $2^{\frac{1}{7}}$ = 1.1041

or, r = (1.1041 - 1)

or, r = 0.1041

Therefore, interest rate = 10.41%

7 0

4 years ago

Assume that you manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 42%. The T-bill rate

amm1812

Answer:

a. Expected Return = 16.20 %

Standard Deviation = 35.70%

b. Stock A = 22.10%

Stock B = 29.75%

Stock C = 33.15%

T-bills = 15%

Explanation:

a. To calculate the expected return of the portfolio, we simply multiply the Expected return of the stock with the weight of the stock in the portfolio.

Thus, the expected return of the client's portfolio is,

w1 * r1 + w2 * r2
85% * 18% + 15% * 6% = 16.20%

The standard deviation of a portfolio with a risky and risk free asset is equal to the standard deviation of the risky asset multiply by its weightage in the portfolio as the risk free asset like T-bill has zero standard deviation.

85% * 42% = 35.70%

b. The investment proportions of the client is equal to his investment in T-bills and risky portfolio. If the risky portfolio investment is considered of the set proportion investment in Stock A, B & C then the 85% investment of the client will be divided in the following proportions,

Stock A = 85% * 26% = 22.10%
Stock B = 85% * 35% = 29.75%
Stock C = 85% * 39% = 33.15%
T-bills = 15%
These all add up to make 100%

3 0

3 years ago

Read 2 more answers

Denver Systems has total assets of $1,000,000; common equity of $400,000; a gross profit of $800,000; total operating expenses o

krok68 [10]

Answer:

See

Explanation:

4 0

3 years ago

Consider a small country that is closed to trade, so its net exports are equal to zero. The following equations describe the eco

PtichkaEL [24]

Answer:

this is government alargar effect

5 0

4 years ago

During the last year, Len Corp. generated $1,170.00 million in cash flow from operating activities and had negative cash flow ge

Anit [1.1K]

Answer:

The firm’s cash flow (CF) due to financing activities in the second year is - $450 million

Explanation:

As we know that,

Net increase in cash = Operating activity - investing activity - financing activity

where,

Net increase in cash = Ending balance of second year - ending balance of first year

= $280 million - $200 million

= $80 million

The other items values would remain the same

Now put these values to the above formula

So, the value would equal to

$80 million = $1,170 million - $640 million + financing activity

$80 million = $530 + financing activity

So, financing activity = $80 million - $530 million

= - $450 million

8 0

3 years ago