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hichkok12 [17]
2 years ago
13

Bon Chance, Inc., has an odd dividend policy. The company has just paid a dividend of $3 per share and has announced that it wil

l increase the dividend by $5 per share for each of the next four years, and then never pay another dividend. If you require a return of 9.7 percent on the company’s stock, how much will you pay for a share today
Business
1 answer:
Anni [7]2 years ago
3 0

Answer:

If you require a return of 9.7 percent on the company’s stock, you will pay $47.61 for a share today .

Explanation:

Price today = Present Value of Dividends

Present Value of Dividends :  

Year                Dividend             Discounting Factor(9.7%)

0                 3.0000  

1                    8.00                 0.9115770282588880

2                    13.00                 0.8309726784493050

3                     18.00                  0.7574956047851460

4                     23.00                  0.6905155923292130  

year                                     Present Value(Dividend* Discounting factor)

0

1                                                                         7.2926162260711000

2                                                                        10.8026448198410000

3                                                                        13.6349208861326000

4                                                                        15.8818586235719000

Present Value of Dividends                            47.612040555616600

Therefore, If you require a return of 9.7 percent on the company’s stock, you will pay $47.61 for a share today .

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Theo wants to have $40,000 for a down payment on a house five years from now. He can either deposit one lump sum today or he can
juin [17]

Answer:

$1932.37

Explanation:

To find out how much additional money he must deposit if he waits for 1 year rather than making a deposit today we need to find the difference:

Difference = Value after 1 year - Present value

We first convert the interest rate percentage by dividing interest rate value by 100

Present Value = $40 000 / (1 + 0.035)5 = $7729.47

Value after 1 year = $40 000 / (1 + 0.035)4 = $9661.81

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4 0
1 year ago
The defect rate for data entry of insurance claims at Sadegh Kazemi Insurance Co. has historically been about 1.50​%. This exerc
AURORKA [14]

Answer and Explanation:

Data provided in the question

defect rate i.e. \bar p = 1.50%

the sample size = n = 200

Now

S_p = \sqrt{\frac{\bar p (1 - \bar p)}{n} } \\\\= \sqrt{\frac{1.50\% (1 - 1.50\%)}{200} }

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UCL_p = \bar p + 35p

= 0.015 + 3 (0.008595057 )

= 0.04078517

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= 0.015 - 3 (0.008595057 )

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7 0
2 years ago
TarHeel Corporation reported pretax book income of $1,026,000. During the current year, the net reserve for warranties increased
Yuri [45]

Answer:

Effective accounting tax rate =  17.61%

Explanation:

given data

Pre Tax book income = $1,026,000

Reserve for warranties = $101,300

Tax depreciation = $206,500

Deduction inform of dividends received = $55,200

to find out

accounting effective tax rate

solution

we assume here tax rate is 21 %

So Taxable income will be here as  

Taxable income = [ $1,026,000 + $101,300 ] - [ $206,500 + $55,200 ]

Taxable income = $1,127,300 - $261,700

Taxable income = $865,600

Tax @21% = $865,600 × 21%

Tax  = $181,776

Effective accounting tax rate will be

Effective accounting tax rate = \frac{181776}{1026000}  

Effective accounting tax rate =  17.61%

6 0
2 years ago
A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the pri
AlekseyPX

Answer:

Macaroni and cheese is an inferior good.

Explanation:

From the information given in the question, we can assume that macaroni and cheese are considered as an inferior good for this consumer because there is an inverse relationship between the income level of this consumer and the quantity demanded for macaroni and cheese.

If there is 10% increase in the income of an individual then as a result quantity demanded of macaroni and cheese decreases by 15% and the price of this good remains constant. This shows that macaroni and cheese is an inferior good.

6 0
1 year ago
Which Marriott Luxury brand is MOST LIKELY to provide the timeless glamour of its heritage in pristine locations while offering
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Answer:

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