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OverLord2011 [107]
3 years ago
8

A company expects to pay a dividend of $3.50 per share one year from today. the dividend is expected to grow at 30 percent per y

ear for three years. Thereafter, the dividend will grow at 4 percent per year in perpetuity. if the appropriate discount rate for the stock is 13 percent, what is the price of the stock today
Business
1 answer:
monitta3 years ago
7 0

Answer: $70

Explanation:

Price = Present value of year 1 dividend + Present value of year 2 dividend + Present value of year 3 dividend + Present value of year 4 dividend + Present value of year 4 price

Year 4 price = Year 4 dividend / ( Required return - Growth rate after 3 years)

= (3.50 * 1.30³ * 1.04) / (13% - 4%)

= $88.856

Price = (3.50 / (1 + 13%)) + ( (3.50 * 1.3) / 1.13²) + ( (3.50 * 1.3²) / 1.13³) + ( (3.50 * 1.3³) / 1.13⁴) + 88.856/1.13⁴

= $69.97

= $70

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Debit to Salaries and Wages Expense for $40,000

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3 years ago
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I would say A

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3 years ago
Assume that the international Fisher effect (IFE) holds between the U.S. and the U.K. The U.S. inflation is expected to be 5%, w
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a. Market penetration

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8 0
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In the long run, perfectly competitive firms will react to profits by increasing production.

Firms in a perfectly competitive world earn zero profit in the long run. While firms can earn accounting profits in the long run, they cannot earn economic profits.

In the long run, perfectly competitive firms will react to profits by decreasing production. CORRECT: In the long run, perfectly competitive firms will respond to losses by exiting the market. In the long run, perfectly competitive firms will respond to losses by reducing production.

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Learn more about a perfectly competitive firm here: brainly.com/question/25327136

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8 0
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