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12345 [234]
3 years ago
10

You wish to earn a return of 13% on each of two stocks, X and Y. Stock X is expected to pay a dividend of $3 in the upcoming yea

r while Stock Y is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends for both stocks is 7%. The intrinsic value of stock X______
a. cannot be calculated without knowing the market rate of return
b. will be greater than the intrinsic value of stock Y
c. will be the same as the intrinsic value of stock Y
d. will be less than the intrinsic value of stock Y
e. none of the above is a correct answer.
Business
1 answer:
Otrada [13]3 years ago
8 0

Answer: D. will be less than the intrinsic value of stock Y

Explanation:

Based on the information given above, the intrinsic value of Stock X will be calculated thus:

D1 = Dividend in next year = $3

g = growth rate = 7%

r = = 13%

Therefore, intrinsic value of Stock X will be:

= D1 / (r-g)

= 3 / (13% - 7%)

= 3/6%

= 3 / 0.06

= $50

Therefore, the intrinsic value of stock X is $50.

Intrinsic value of Stock Y will b calculated thus:

D1 = $4

g = 7%

r = 13%

Intrinsic value of Stock Y will be:

= D1 / (r-g)

= 4 / (13% - 7%)

= 4/6%

= 4 / 0.06

= 66.67

Intrinsic value of Stock Y is $66.67

Therefore, the intrinsic value of Stock X will be less than the intrinsic value of Stock Y

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Suppose you are an analyst in the oil refinery industry and are responsible for estimating the equilibrium price and quantity of
Maru [420]

Answer:

1. 80,000

2. $40 per barrel

Explanation:

1. As we can see from the table provided The equilibrium quantity in this market is 80,000 barrels of heating oil per day,  as quantity demanded match quantity supplied

2. As we can see from the table provided The equilibrium price is $40 per barrel as in this cost there is an intersection of quantity demanded and quantity supplied. In other words the equilibrium price and quantity could be find out when the quantity demanded equal to quantity supplied

4 0
3 years ago
What are the opportunity costs of going to the gym for a workout rather than studying for an economics test?
NARA [144]

Answer:

see below

Explanation:

Opportunity cost is the value of the forfeited benefits as a result of making a decision in a certain way. Decision making involves choosing one item over others. The cost or value of the option not chosen is the opportunity cost. The value of the forfeited option is the opportunity cost.

In choosing to go to the gym, the forgone activity is studying for the economic exam. The benefits associated with studying for the economic test is the opportunity cost. The value attached to the economic test, such as good grades, passing the test,  or any reward arising from studying for the test, is the forfeited benefit and hence the opportunity cost.

6 0
3 years ago
According to circus founder P. T. Barnum, what happens without publicity?
almond37 [142]

Answer:

<em>"A terrible thing happens without publicity...</em><em>nothing</em><em>!"</em>

3 0
3 years ago
Read 2 more answers
During February 2018 its first month of operations, the stockholders of Bonita Enterprises invested cash of $49500. Bonita had c
hichkok12 [17]

The balance in Cash at February 28 = $44900

<u>Explanation:</u>

Given:  

Cash invested by stockholders of Bonita Enterprises = $49500

Cash revenues of Bonita = $10100

Expenses paid by Bonita = $14700

Calculation of balance in cash as follows:

The balance in Cash at February 28 = Cash Invested + Cash Revenues - Paid Expense=$ 49,500 + $ 10100 - $ 14,700= $ 44900

Hence the correct answer is $44900

5 0
3 years ago
Denise has $13,424 in a savings account with the District 113 Teacher's Credit Union. While economic conditions have caused the
coldgirl [10]

Answer:

Explanation:

$120= the amount to pay for the shoe

$20 paid for the month

Balance to pay = $100

Then 3% interest rate on credit card = 3% of $100=$3

Therefore amount to pay = $3+$100=$103

7 0
2 years ago
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