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Brrunno [24]
2 years ago
7

Waller Co. paid a $0.137 dividend per share in 2000, which grew to $0.55 in 2012. This growth is expected to continue. What is t

he value of this stock at the beginning of 2013 when the required return is 13.7 percent? (Round the growth rate, g, to 4 decimal places. Round your final answer to 2 decimal places.)
Business
1 answer:
Elena L [17]2 years ago
7 0

Answer:

Dividend in year 2000 (Do) = $0.137

Dividend in year 2012 (D12) = $0.55

Required return (Ke) = 13.7% = 0.137

D12 = Do(1 + g)n

$0.55 = $0.137(1 + g)12

<u>$0.55</u> = (1 + g)12

$0.137

4.0146 = (1 + g)12

12√4.0146 - 1 = g

1.1228 - 1 = g

g = 0.1228 = 12.28%  

Po = Do<u>(1 + g) </u>

            ke - g

Po = $0.55<u>(1 + 0.1228) </u>

                 0.137 - 0.1228

Po = $0.55<u>(1.1228) </u>

                   0.0142  

Po = $43.49  

Explanation:

In this case, we need to calculate the growth rate using the formula D12 = Do(1 + g)12. Then, we will calculate the current market price, which is a function of current dividend paid, subject to growth rate, divided by the excess of cost of equity over growth rate.

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Quizno's is conducting a contest in which customers are asked to name a new sandwich. The winner gets a free sandwich each day f
PIT_PIT [208]

Answer:

sales promotion

Explanation:

Sales promotions are used as a short term tactic to increase the sales of a good or service very rapidly, but they are not meant to last. Usually sales promotions offer product or monetary incentives to but the goods or services, e.g. discounts, rebates, coupons, free samples, contests, extra product, etc.

8 0
2 years ago
In his job, Damon often identifies causes of problems with telecommunication equipment. Which is most likely his employer?
Nonamiya [84]

Answer:

B) a local cable company

Explanation:

A local cable company provides communication services using underground cables. Service offed by a cable company includes televisions, internet connectivity, and telephone services. Such a company needs communication equipment to facilitate signal and message transmission.

Damien repairs communication equipment. He probably works for a local cable company.

7 0
1 year ago
When the price level decreases, _____. rev: 06_12_2018 Multiple Choice the demand for money falls and the interest rate falls ho
beks73 [17]

Answer:

The demand for money falls and the interest rate falls.

Explanation:

Price level can be described as the evaluation of the amount in which goods and services are sold in the market. A change in the price level can greatly affect the demand of a customer either positively or negatively.

A decrease in the price level enables a customer to purchase more products and at the same time save some amount of money, this results in the reduction of interest rates.

When the price level reduces, individuals will need less amount of money to buy the same quantity and type of product.

6 0
2 years ago
Leo received $7,500 today and will receive another $5,000 two years from today. He will invest these funds when he receives them
alekssr [168]

Answer:

Value of Investment= Principal (1+Rate of return)^Number of periods

For the first investment the principal is 7,500, the rate of return is 11.5% and the number of periods are 5 so the value of the investment will be

7,500 (1+0.115)^5=12,925

For the second investment the principal is 5,000, the rate of return is 11.5 and the number of periods are 3 as the 5,000 is invested two years from today.

5,000*(1+0.115)^3=6,931

Total value of investments = 12,925 +6,931 = $19,856

8 0
1 year ago
Marcie and her husband, Franklin, each own 50 shares of Chestnut, Inc. Sally, Marcie's old high school friend, owns the remainin
RSB [31]

Answer:

$38,000 Dividend

Explanation:

Based on the information given the tax treatment of the redemption to Marcie will be $38,000 dividend reason been that her husband shares was been attributed to her, and Since she owns 60 shares her remaining 10 shares including that of her husband 50 shares of Chestnut's will be 110 shares calculated as 150 shares - 40 shares outstanding.

Therefore when we look at this 60 shares/110 shares is greater than 50% which means that Marcie fails the 50% test which makes the redemption to be treated as a dividend.

Hence, the tax treatment of the basis of the shares redeemed will be $38,000 Dividend.

8 0
2 years ago
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