Regardless of the career you want to pursue, you can still get the ____

It announces that it plans to pay dividends of $1 per share exactly three years from now and $2 per share exactly four years fro

kkurt [141]

The Question is incomplete.

The complete question is as follows:

It announces that it plans to pay dividends of $1 per share exactly three years from now and $2 per share exactly four years from now. From year 5 onwards, dividends are expected to grow at a constant rate of 10% per year. The company pays no dividends in years one and two. The risk-free rate is 5%, the company's beta is 1.5 and the expected return on the market is 11%. Calculate the price of this stock today

Answer:

Price of stock = $34.42

Explanation:

The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.

Required rate of return

Using the CAPM , the rate of return on equity can be determined as follows:

E(r)= Rf +β(Rm-Rf)

E(r) =? , Rf- 5%, Rm- 11%, β- 1.5

Ke = 5% + 1.5× (11-5)%

= 14%

Present value of Dividends(PV)

Year PV

3 $1.00, × (1.14^(-3) = 0.6749

4 $2.00× 1.14^(-4) = 1.18416

5 and beyond

This will be done in two (2) steps as follows:

PV in year 4 = (2 × 1.10) /(0.14-0.1) = 55

PV in year 0 = 55× 1.14^(-4) = 32.56

Price of stock

= 0.6749 + 1.18416 + 32.56

= $34.423

7 0

3 years ago

A company is assessing opportunities in the BRIC companies and determines that _________ is one of the youngest populations in t

romanna [79]

Answer:

India is one of the youngest Nation in the world

Explanation:

The countries that fall under the BRICs (Brazil, Russia, India and China), will have large tendency to shape the future of world because these countries are growing with greater GDP growth rates.

India is the one of the youngest nation with having its 27% population living below 27 years. The generation has opted to technological advances which suits most of the companies to move here. The human resource here is available at low cost and the free trade agreement of India with a lot of countries has helped it to equip its resources to maximum which is the reason it has 7.6 GDP growth rate.

There is increased demand for infrastructure development, basic needs provision and many other commodities. So this makes India an attractive market with a well diversified people taste because a lot of civilizations are living and burried here.

5 0

3 years ago

A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 17%, while stock B has a standard

Goryan [66]

Answer:

.793

Explanation:

Formula

.032=.7^2*.17^2+.3^2*.23^2+2(.7)(.3)(.17)(.23)p

.032=.0142+.0048+.0164p

.032-.0142-.0048=.0164p

.0164p=.013

p=.013/.0164

p=.793

3 0

3 years ago

If you have a professional e-mail address, it should always be included on your résumé. Please select the best answer from the c

cluponka [151]

The answer would be Ture.

7 0

3 years ago

Read 2 more answers

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:

Rainbow [258]

Answer:

d. $75,000

Explanation:

total Los Angeles Bay Area Central Valley

Revenues $750,000 $200,000 $235,000 $325,000

Variable exp. $410,000 $110,000 $120,000 $180,000

Controllable $210,000 $65,000 $75,000 $70,000

fixed expenses

controllable $130,000 $25,000 $40,000 $75,000

profit margin

Noncontrollable fixed expenses and common fixed expenses are not included in the calculation of individual controllable profit margin.

7 0

3 years ago

Regardless of the career you want to pursue, you can still get the _____ necessary to achieve success.