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2 years ago

If D1 = $1.25, g (which is constant) = 5.5%, and P0 = $40, what is the stock's expected total return for the coming year?

Business

1 answer:

trapecia [35]2 years ago

3 0

Answer:

The expected totar return is: 8,625%

Explanation:

Total return, when measuring performance, is the actual rate of return of an investment or a pool of investments over a given evaluation period. Total return includes interest, capital gains, dividends and distributions realized over a given period of time. Total return is the amount of value an investor earns from a security over a specific period, typically one year.

The formula for the total stock return is the appreciation in the price plus any dividends paid, divided by the original price of the stock.

Total stock return= [(P1-P0)+D]/P0

P0: initial stock price

P1: Ending stock price (Period 1)

D0: dividend

In this case, we do not have P1. So we have to use an alternate version of the Gordon Growth Model. The GGM is mainly applied to value mature companies that are expected to grow at the same rate forever.

P= D1/(r-g)

where:

P=Current Stock Price

g=Constant growth rate in perpetuity

expected for the dividends

r=Constant cost of equity capital for that

company (or rate of return)

D1=Value of the next year’s dividends

By moving terms and isolating "r" we achieve the following formula:

r= D1/P+g

r=1,25/40+0,055= 8,625%

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1 year ago

Read 2 more answers

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Answer: The person fills "silence" during conversations

Explanation:

Culture is simply regarded as people's way of life. The way if life include their food, the kind of music they listen to, their religion, language, their beliefs, values etc.

Someone who is not culturally competent in working with others from different cultures would usually be silent during conversations. This is because the person doesn't know much about the culture and can't really be involved in the conversation.

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2 years ago

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Answer:

The correct answer is Field-level briefing.

Explanation:

This level involves resources assigned to operational tasks and / or work at or near the incident site. These sessions will be delivered to individual subordinates, full crews or multiple crews, such as Attack Teams or Task Forces, will occur at the beginning of an operational shift.

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1 year ago

Tee Time Golf Resort plans to use famous Kauri wood from New Zealand for parts of the interior of the magnificent clubhouse at i

Tju [1.3M]

Answer:

correct option is C. it's a good time to buy the wood.

Explanation:

given data

slab = 10 feet

cost Tee Time = $5,000

$500 US dollars = $738 NZ dollars

solution

If they import timber from New Zealand. Tea Golf Resort pays less than $ 5000 to import Wood from New Zealand at the current exchange rate. This is a good time for them to import forests

we get here current exchange rate of 1 dollar that is as

US $500 = NZ $738

so $1 = $\frac{738}{500}$

$1 = NZ $1.476

current exchange rate is $1 = NZ $1.476

10 foot slab costs $5000

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1 year ago

Nachman Industries just paid a dividend of D0 = $1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% i

ladessa [460]

Answer:

$44.87

Explanation:

Use Dividend Discount Model to solve this question;

First, find the dividend per year;

First year's dividend ; D1 = D0(1+g)

D1 = 1.32 (1.30) = 1.716

Second year's dividend ; D2 = 1.716 (1.10) = 1.8876

Third year's dividend ; D3 = 1.8876 (1.05) = 1.9820

Next, find the present value of each dividend at 9% required return;

PV (D1) = 1.716 / (1.09) = 1.5743

PV (D2) = 1.8876 /(1.09²) = 1.5888

PV (D3 onwards) = $\frac{\frac{1.9820}{0.09-0.05} }{1.09^{2} } \\ \\ = \frac{47.19}{1.1881}$

= PV (D3 onwards) = 41.7052

Sum up the PVs to find the current market value of the stock;

= 1.5743 + 1.5888 + 41.7052

= 44.8683

Therefore the value is $44.87

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1 year ago