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shtirl [24]
1 year ago
6

The CFO of a publicly traded company is expecting to pay a dividend next year of $1.25 and projecting that the price of the comp

any’s stock will be $45 in 1 year. The CFO has determined that the required rate of return for the company is 10%. Based on the data available, what is the value of one share of stock today?
Business
1 answer:
Levart [38]1 year ago
8 0

Answer:

$42.604

Explanation:

Using dividend growth model we have D1 = $1.25, dividend at end of year 1

P1 = $45 price at the end of year 1

Ke = 10% Cost of capital or expected return

g = ? the growth rate expected

Thus

D2 = D1 + g

$45 = \frac{1.25+g}{0.10-g}

$4.5 - 45g = 1.25 + g

$3.25 = 46g

7.06% = g

Now, using value of g we have

P0 = \frac{1.25}{0.10-0.0706}

Current price P0 = $42.604

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erik [133]
An example of delayed purchasing is when you would pay for a hot tub in 39 weeks and receiving the hot tub today. It is like a car loan, you would pay for the car over a certain time frame and you would drive home with the car that day. The correct answer is B. 
4 0
2 years ago
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You are the general manager of a regional chemical company. In the course of producing your bulk chemicals, large amounts of par
monitta

Answer: Yes

Explanation:

Even though the scrubber system is expensive, it is worth it as it is improving human health in the society. This will count towards the sustainable development of the society as well as the social responsibility of the company.

And if the company is worried about profits, installing this system will show that they care about the society and its people which will probable increase their customer base when they include this deed in their marketing campaigns. People generally love a "compassionate" company so this is a strong likelihood.  

5 0
2 years ago
Keidis Industries will pay a dividend of $3.55, $4.65, and $5.85 per share for each of the next three years, respectively. In fo
german

Answer:

price = $47.82

Explanation:

Find the present value of each dividend at the required rate of return and sum them up to get the current price;

PV = FV /(1+r)^n

PV(D1) = 3.55/ (1.099^1) = 3.2302

PV(D2) = 4.65/ (1.099^2) = 3.8500

PV(D3) = 5.85 / (1.099^3) = 4.4072

PV(Price at t=4) = 53 / (1.099^4) = 36.3316

Price = 3.2302+2.9392+4.4072+36.3316

= 47.81897

Therefore, price = $47.82

8 0
2 years ago
Describe a problem you face in your everyday life or at work. How might you use hypothesis testing to find a solution or improve
ololo11 [35]

Answer:

The common problem i encounter mostly is the statistical modelling problem.

In this scenario we choose best combination of independent variables for the hypothesis testing. the independent variable shows the significant effect on dependent variable so we keep it in modelling.

My null hypothesis would be that there is no significant effect of independent variable on dependent variable.  for my alternative hypothesis there exist is significant effect of independent variable on dependent variable.

Explanation:

The common problem I face daily is the statistical modelling problem which is the selection of relevant independent variable for prediction modelling.

In this example to select the best combination of independent variables we use hypothesis testing. if the independent variable has significant effect on dependent variable then the independent variable shows the significant effect on dependent variable so we keep it in modelling. In this way the model gets improved.

Since there are always two variables or two categories. hence it has a two sample test.

The Hypothesis can be shown below:

Null hypothesis:

H0: There is no significant effect of independent variable on dependent variable.

Alternative hypothesis:

Ha: There is significant effect of independent variable on dependent variable.

6 0
1 year ago
Donielle opened a revolving line of credit with a $4,000 credit limit. How much does she
nika2105 [10]

Answer:

B

Explanation:

1100-200

4000-900

5 0
1 year ago
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