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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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Answer:

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Explanation:

As per the data given in the question,

Average expenditure for 2016 = ($200,000×12÷12) +($300,000×4÷12)+($300,000×0÷12)

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Interest capitalized for 2016 =($200,000×12÷12)+($300,000×4÷12)+($300,000×0÷12)×12%

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Average expenditure for 2017 :

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Specific borrowing = $750,000×9÷12×12%

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Excessive amount = ($1,036,000 - $750,000)×9÷12×9%

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Interest capitalized for 2017 = $67,500 + $19,305

= $86,805

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3 years ago
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3 years ago
What is the market value of a stock that paid a dividend of $3.80 last year if the dividend is increasing at 10% annually and th
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Answer:

The market value of the stock is $41.8

Explanation:

Div 1 = Div 0 (1+r)

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Answer:

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Explanation:

Price can be defined as the amount of money that is required to be paid by a buyer (customer) to a seller (producer) in order to acquire goods and services.

In sales and marketing, pricing of products is considered to be an essential element of a business firm's marketing mix because place, promotion and product largely depends on it.

One of the importance associated with the pricing of products is that, it improves the image of a business firm.

Multipoint pricing occurs when a company aggressively prices in one market to elicit a competitive response from a rival in another market.

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