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fenix001 [56]
2 years ago
15

Using a dividend discount model, what is the value of a stock that pays an annual dividend of $5 that is not expected to grow, a

nd the discount rate is 10%? What will be the value of the stock if the dividend is expected to grow 5% per year?
Business
1 answer:
Alenkasestr [34]2 years ago
5 0

Answer:

a. <u>Value of the stock without growth rate</u>

= D1 / (r - g)

= $5 / (10% - 0)

= $5 / 10%

= $5 / 0.10

= $50

b. <u>Value of the stock with growth rate</u>

= D1 / (r - g)

= $5 / (10% - 5%)

= $5 / 5%

= $5 / 0.05

= $100

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Y_Kistochka [10]

We can calculate for the total stockholders’ equity by using the formula:

Total stockholders’ equity = Number of Shares * Price per Share – Deficit Balance

Substituting our given values:

Total stockholders’ equity = 19,000 shares * ($12 / share) - $75,000

Total stockholders’ equity = $153,000

5 0
3 years ago
A stability strategy is a grand strategy that involves little or no significant organizational change. For example, Love Forever
zloy xaker [14]

Answer:

The correct answer is True.

Explanation:

A stability strategy seeks to remain as long as possible in the maturity phase (or stability) of the company, reaping the fruits of the investments made. A survival strategy seeks to survive in a hostile environment, while retaining its market share.

In general, stability and survival strategies are defensive strategies, that is, strategies that seek to maintain the competitive position achieved by the company. This fact does not mean that the company cannot grow; in fact, on many occasions, to maintain market share growth is necessary (sustainable growth). In other cases, these strategies involve a decrease (organizational downsizing, outsourcing or outsourcing of activities).

These strategies are designed for the level of corporate strategy, although they can also be adopted for competitive or business strategies, as they allow the analysis for each business or activity to which the company is engaged.

4 0
3 years ago
Read 2 more answers
What would happen if the European Union put a quota on American jeans and only allowed 4,000, pairs of jeans to be imported?
brilliants [131]

If the European Union put a quota on American jeans only allowing a small portion to be imported the demand for the jeans would rise even though the supply would not follow that.  When there is a small limit on something that consumers want, the price usually goes up because they know they will sell the items regardless and in this case that may happen. The price of jeans will rise, the demand will rise, but the supply will not.

7 0
3 years ago
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Which of the following mechanisms would be most likely to help motivate managers to act in the best interests of shareholders?
myrzilka [38]

Answer:

The correct answer is d) Increase the proportion of executive compensation that comes from stock options and reduce the proportion that is paid as cash salaries.

Explanation:

Option D. represents two situations that perfectly describe the interest that the shareholders pursue: the maximization of the profits of the company where they have their resources invested.

The shareholder, on the other hand, is also an investor, since he contributes capital with a view to obtaining a dividend.

Its investment is said to be in equities, given that there is no contract through which the shareholder will receive fixed fees in return for his investment. Their remuneration is through two ways:

  1. Dividend
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5 0
3 years ago
Jennifer's income is too high to qualify for the credit on Form 8880, Credit for Qualified Retirement Savings Contributions.A. T
a_sh-v [17]

Answer:

given statement is true

Explanation:

solution

the given statement is true because  

by encouraging, people of the lower income is contributing to their retirement savings account.  

and IRS offers a tax credit for contributions to them for claim the retirement savings credit

so  Jennifer must use IRS form 8880

and credit percentage decreases as the as AGI increases

so we can say given statement is true

3 0
3 years ago
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