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Zanzabum
2 years ago
14

Springboro Tech is a young start-up company. No dividends will be paid on the stock over the next 15 years, because the firm nee

ds to plow back its earnings to fuel growth. The company will pay a $15 per share dividend in 16 years and will increase the dividend by 4 percent per year thereafter. What is the current share price if the required return on this stock is 8 percent
Business
1 answer:
maxonik [38]2 years ago
7 0

Answer:

The price of stock today is $118.22

Explanation:

To calculate the price today, we will use the dividend growth model and discount back the cashflows. The first dividend will be received in year 16 so $15 received in year 16 will be dicounted back to year zero at 8% cost. Besides after that the growth rate becomes constant so the terminal value will be calculated at the end of year 16 and will be discounted back to year zero also using same 8% discount rate and 16 year as power.

P0 = 15 / (1+0.08)^16 + [15*(1+0.04) / 0.08-0.04] / (1+0.08)^16

P0 = $118.22

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On December 31, 2021, Gardner Company holds debt securities classified as HTM with a face amount of $100,000 and a carrying valu
Liono4ka [1.6K]

Answer:

there are no options, but the journal entry should be:

Dr Cash 2,500

Dr Investment in bonds 350

    Cr interest revenue 2,850

Explanation:

Since the bonds' carrying value is less than the face value, it means that Gardner Company purchased them at a discount. When the bonds were purchased, the investment in bonds account's balance was not $100,000 (the par value), instead it was recorded at the lower amount at which they were purchased. As coupon payments are received, the discount on the bonds is amortized and their carrying value should increase until it reaches par value on maturity date.

4 0
2 years ago
which member of the acquisition team is responsible for forming the acquisition team and leading the team
Alona [7]

Answer:

A project manager.

Explanation:

Project management can be defined as the process of designing, planning, developing, leading and execution of a project plan or activities using a set of skills, tools, knowledge, techniques and experience to achieve the set goals and objectives of creating a unique product or service. Generally, projects are considered to be temporary because they usually have a start-time and an end-time to complete, execute or implement the project plan.

The fundamentals of Project Management includes;

1. Project initiation

2. Project planning

3. Project execution

4. Monitoring and controlling of the project

5. Adapting and closure of project.

Hence, it is very important and essential that project managers in various organizations, businesses and professions adopt the aforementioned fundamentals in order to successfully achieve their aim, objectives and goals set for a project.

Generally, a project manager is a member of the acquisition team and is responsible for forming the acquisition team and leading the team through the various stages of the project.

4 0
1 year ago
Which two skills and abilities are essential for a ship captain?
Maksim231197 [3]
Leadership skills and compassion good vision
3 0
2 years ago
Read 2 more answers
When a development team is having trouble delivering a working increment because they don't understand a functional requirement?
Aleksandr [31]
If a developmental team is having trouble delving a working increment because they don't understand a functional requirement, they should work with the product owner so that can get better clarification on how the product works. If the developmental team continues to have problems, it is likely the result of the product that has functional issues. 
8 0
2 years ago
Stock Y has a beta of 1.2 and an expected return of 12.1%. Stock Z had a beta of 0.8 and an expected return of 7.85%. The risk-f
levacccp [35]

Answer:

Since the expected return and required return are different for both Stock X and Z, we say that they are not correctly priced

Explanation:

<em>To determine whether or not the stocks are correctly priced ,</em>

<em>we have to compare the r</em><em>equired return</em><em> and the </em><em>expected return on each of them.</em>

Required return = Rf +β (Rm-Rf)

Note that Rm-Rf  is also known as market risk premium

                                  <em>Stock Y                         Stock Z</em>

<em>Required return   </em>       2.4% + 1.2(7.2%)            2.4% + 0.8(7.2%)

                                  = 11%                                   = 8.2%

<em>Expected return</em>            <em>12.1%                           7.85%</em>

Since the expected return and required return are different for both Stock X and Z, we say that they are not correctly priced

6 0
2 years ago
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