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galben [10]
2 years ago
14

Investors expect that Amalgamated Aircraft Parts, Inc. will pay a dividend of $2.50 in the coming year. Investors requirea 12% r

ate of return on the company's shares and they expect dividends to grow at 7% per year. Using the dividend valuation model, find the intrinsic value of the company's common shares.
Business
1 answer:
ELEN [110]2 years ago
5 0

Answer:

$50

Explanation:

Dividend discount model (DDM) is used to calculate intrinsic value of a stock. Since the dividends are expected to grow indefinitely, the formula will be as follows;

Price (P0) = D1 / (r-g)

where D1 = Next year's dividend = 2.50

r = required rate of return = 12% or 0.12 as a decimal

g = dividend growth rate = 7%

Price (P0) = 2.50/(0.12-0.07)

P0 = 2.50 /0.05

P0 = $50

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2 years ago
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Answer:

The write off of the account should include a debit to the allowance for uncollectible accounts, and a credit for bad debt expense:

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Bad Debt Expense                                                  $10,000

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A manufacturing company plans to forecast its sales. Upper management plans to assemble its most senior personnel to have meetin
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Answer:

B. Jury of executive opinion method.

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In as much as the people involved have experience in terms of forecasting, their overall submission will form the basis of future sales forecast of the organization.

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Answer:

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