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Schach [20]
3 years ago
8

Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends.

However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.50 coming 3 years from today. The dividend should grow rapidly—at a rate of 35% per year—during Years 4 and 5, but after Year 5, growth should be a constant 7% per year. If the required return on Computech is 13%, what is the value of the stock today?
Business
1 answer:
kirza4 [7]3 years ago
8 0

Answer:

$10.08

Explanation:

First, find dividend per year;

D3 = 0.50

D4 = 0.50(1.35) = 0.675

D5 = 0.675 (1.35 ) = 0.9113

D6 = 0.9113 (1.07) = 0.9751

Next, find the present value of each dividend at 13% rate;

PV (of D3) = 0.50/(1.13^3) = 0.3465

PV (of D4) = 0.675/(1.13^4) = 0.4140

PV (of D5) = 0.9113/(1.13^5) = 0.4946

PV (of D6) = \frac{\frac{0.9751}{0.13-0.07} }{1.13^{5} } \\ \\ = \frac{16.2517}{1.8424}

PV (of D6 )= 8.8209

Add the PVs to find the stock price;

= 0.3465 + 0.4140 + 0.4946 + 8.8209

= $10.08

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Assets Liabilities and Net Worth
KiRa [710]

Answer:

The correct answer is $30 billions.

Explanation:

The checkable deposits are given as $140 billions.

The total reserves are $51 billions.

The required reserve rate is 30%.

The required reserves will be

=30% of $140 billions

=0.3 \times 140

=$42 billions

The excess reserves will be

=total reserves-required reserves

=$51-$42

=$9 billions

Maximum expansion by lending will be

=\frac{excess reserves}{required \ reserve\ rate}

=\frac{9}{0.3}

=$30 billions

So, the money supply can be expanded by a maximum amount of $30 billions.

5 0
3 years ago
If you are in a car accident caused by someone else who also has insurance, which type of insurance plan will not require you to
user100 [1]

I believe the correct answer to this is:

“Property Damage Liability”

 

<span>This type of coverage protects the insurer from paying out the pocket fees especially when found at guilt of the damage. Actually this does not cover damage to your own property but only kicks in when you are found to be at fault of the accident.</span>

6 0
4 years ago
The development of kidney failure becomes more prevalent with age; therefore, the amount of _______ in the diet must be reduced.
andre [41]
The development of kidney failure becomes more prevalent with age; therefore, the amount of protein in the diet must be reduced.

People with chronic kidney disease or kidney failure will face a dilemma with protein consumption because they can't remove the protein waste in the kidney. The protein will pollute the blood if kidney can't remove it.
5 0
3 years ago
If plant assets of a manufacturing company are sold at a gain of $1,000,000 less related taxes of $350,000, and the gain is not
alekssr [168]

Answer:

D. a gain of $1,000,000 and an increase in income tax expense of $350,000.

Explanation:

Given that

The gain is $1,000,000

And, the taxes is $350,000

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Therefore the option d is correct

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