Answer:
I believe the APY would be $520 for the rounded version and $520.20 for the not rounded
(not completely certain since i didnt fully understand)
Explanation:
using the formula for calculating compounding semi annualy
A = P(1 + r)t
A= 500(1+0.02)2 (i put 2 instead of one year because its semi annually so twice)
A= 500(1.02)2
A= 500x1.04=$520(rounded)
A=500x1.0404= $520.20(not rounded)
Please correct me if I understood your question wrong
Answer:
<h2>Fowler, Inc.</h2>
a. Current price = Current Dividend/r - g
where r = Required Rate of Return
and g = growth rate
= $2.70/0.09 - 0.045
= $2.70/0.045
= $60
b. The price in six years' time, growing at 4.5%
= Current price x (1 + g)^6
= $60 x 1.30226
= $78.14
c. The price in thirteen years' time, growing at 4.5%
= $60 x 1.772196
= $106.33
Explanation:
a) Data and Calculations:
Current Dividend = $2.70
Dividends' constant growth rate = 4.5% p.a. indefinitely
Investors' required rate of return = 9%
Fowler, Inc.'s stock prices calculated using the dividend, growth rate, and investors required rate of return gives the intrinsic values of the stock for the current year, in six and thirteen years' time. The intrinsic value calculation eliminates the need to value the stock subjectively.
