![jamielytle](/avatars/10050.jpg)
jamielytle
30.10.2020 •
Business
A tech start-up company has just become public. It just paid $3 dividend per share, which will grow 10% for the next two dividends. Afterwards, the dividends will level off and grow at 4% per year forever. If the investors require 6% return on similar investments, what is the price of stock
Solved
Show answers
More tips
- W Work and Career Secrets of Punctuality: How to Learn to Never Be Late?...
- L Leisure and Entertainment How to Choose the Perfect Gift for Men on February 23rd?...
- H Health and Medicine How to Treat Whooping Cough in Children?...
- H Health and Medicine Simple Ways to Lower Cholesterol in the Blood: Tips and Tricks...
- O Other How to Choose the Best Answer to Your Question on The Grand Question ?...
- L Leisure and Entertainment History of International Women s Day: When Did the Celebration of March 8th Begin?...
- S Style and Beauty Intimate Haircut: The Reasons, Popularity, and Risks...
- A Art and Culture When Will Eurovision 2011 Take Place?...
- S Style and Beauty How to Choose the Perfect Hair Straightener?...
- F Family and Home Why Having Pets at Home is Good for Your Health...
Answers on questions: Business
- B Business Sony is currently exploring opportunities in a variety of new areas including Life Space UX, Sports Entertainment, and Sony Computer Science Laboratories. Discuss the...
- B Business Marimarsh Corporation reported the pretax financial income (loss) for the years 2015 to 2018 2015 $240,000 2016 $315,000 2017 $125,000 2018 ($562,000) Pretax financial...
- B Business A price-discriminating monopolist divides its customers into two segments based on price elasticity of demand. If it sells its product for a price of $42 in the market...
- B Business Suppose the weighted average cost of capital of the Gadget Company is 10%. If Gadget has a capital structure of 50% debt and 50% equity, a before-tax cost of debt of...
- B Business Sally s Shoes sold merchandise for cash to Happy s Distributing for $200, plus sales tax of $15. Happy s Distributing later returned the merchandise. The journal entry...
- B Business Because your mother is about to retire, she wants to buy an annuity that will provide her with $75,000 of income a year for 20 years, with the first payment coming immediately....
- B Business Pickett Corporation is a calendar year accrual-based C-corporation. Pickett has adopted a plan of complete liquidation in 2019. Pickett has two unrelated shareholders,...
- B Business When Better Beds produces 40 beds per day, its average variable cost is $600 and its average total cost is $800. The marginal cost of producing the 40th bed is $700....
- B Business Analysts following Armstrong Products recently noted that the company s net cash flow from operations increased over the prior year, yet cash as reported on the balance...
- B Business Why do lower prices increase the demand for product or services...
Ответ:
P0 = $174.3396226 rounded off to $174.34
Explanation:
The two stage growth model of DDM will be used to calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,
P0 = D0 * (1+g1) / (1+r) + D0 * (1+g1)^2 / (1+r)^2 + ... + D0 * (1+g1)^n / (1+r)^n + [(D0 * (1+g1)^n * (1+g2) / (r - g2)) / (1+r)^n]
Where,
g1 is the initial growth rate g2 is the constant growth rate D0 is the dividend paid today or most recently r is the required rate of returnP0 = 3 * (1+0.1) / (1+0.06) + 3 * (1+0.1)^2 / (1+0.06)^2 +
[(3 * (1+0.1)^2 * (1+0.04) / (0.06 - 0.04)) / (1+0.06)^2]
P0 = $174.3396226 rounded off to $174.34
Ответ: