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Ne4ueva [31]
3 years ago
8

Fowler is expected to pay a dividend of $1.81 one year from today and $1.96 two years from today. The company has a dividend pay

out ratio of 40 percent and the PE ratio is 18.95 times. If the required return on the company's stock is 11.9 percent, what is the current stock price?
Business
1 answer:
Mekhanik [1.2K]3 years ago
6 0

Answer:

$77.34

Explanation:

The computation of the current stock price is shown below:

But before that following calculations need to be done

EPS for year 2 = Dividend at year 2 ÷ Payout Ratio

= $1.96 ÷  0.40

= $4.90

Now  the price at year 2 is

Price at year 2 ÷ EPS at year 2 = PE ratio

Price at year 2 ÷ $4.90 = 18.95

Price at year 2 = $92.855

Now finally the current stock price is

= Dividend at year 1  ÷ (1 + rate of interest) + Dividend at year 2 ÷ (1 + rate of interest)^2 + Price at year 2 ÷ (1 + rate of interest)^2

= $1.81 ÷ 1.119 + $1.96 ÷ 1.119^2 + $92.855 ÷ 1.119^2

= $77.34

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Which of the following use direct language effectively? Check all that apply. When you are preparing to complete a PO form onlin
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Answer:

• When you are preparing to complete a PO form online, include all pertinent PO information regarding your department before you select send.

• Speak slowly and clearly.

Explanation:

These two options are those that could best fit in the context of direct language, which can be defined as a form of communication where it is necessary that the message be transmitted in the clearest and most direct way possible, regardless of whether it is a form of spoken communication or Therefore, it is necessary that there be as much information as possible for the understanding of the message to be effective.

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8 0
3 years ago
Nico Trading Corporation is considering issuing longdashterm debt. The debt would have a 30dashyear maturity and a 10 percent co
Mama L [17]

Answer:

After tax cost of debt is 8.82%

Explanation:

Given:

Assume coupon payments are made annually.

Face value (assumed) (FV) = $1,000

coupon rate = 10% or 0.1

Coupon payment (PMT) = $100

Maturity period (nper) = 30

Flotation cost = 0.05×1000 = $50

Discount = 0.05×1000 = $50

Price of debt = Face value - Discount - Flotation cost

                     = $1000 - 50 - 50

                     = $900

Calculate rate using spreadsheet function =rate(nper,pmt,PV,FV)

Rate or YTM(yield to maturity) is 11.17%

Tax rate = 21% or 0.21

After tax cost of debt = 0.1117 (1 - 0.21)

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6 0
3 years ago
Assume you have applied for two Scholarships, a merit scholarship And is athletic scholarship the probability that you receive a
Sliva [168]

The probability of receiving a merit scholarship according to the scenario defined is 0.23

  • Probability of Athletic scholarship, P(M) =?
  • Probability of Athletic Scholarship, P(A) = 0.18
  • Probability of receiving both, P(MnA) = 0.11
  • Probability of receiving atleast one P(AuM) = 0.3

Recall :

  • P(AuM) = P(A) + P(M) - P(AnM)

Substituting the values into the relation:

P(AuM) = P(A) + P(M) - P(AnM)

0.3 = 0.18 + P(M) - 0.11

0.3 - 0.18 + 0.11 = P(M)

P(M) = 0.23

Therefore, the probability of receiving a merit scholarship is 0.23

Learn more :brainly.com/question/18153040

8 0
3 years ago
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