heysorryguys
21.10.2020 •
Business
D0 is currently $3.00, Ke is 8 percent, and g is 5 percent. Under Plan A, D0 would be immediately increased to $3.40 and Ke and g will remain unchanged. Under Plan B, D0 will remain at $3.00 but g will go up to 6 percent and Ke will remain unchanged. a. Compute P0 (price of the stock today) under Plan A. Note D1 will be equal to D0 × (1 + g) or $3.40 (1.05). Ke will equal 8 percent, and g will equal 5 percent. (Round your intermediate calculations and final answer to 2 decimal places.)
Solved
Show answers
More tips
- G Goods and services What Are the Most Popular Services?...
- O Other What is the oldest joke ever told?...
- L Legal consultation How to Properly Inherit: Tips and Recommendations...
- C Computers and Internet Boost your processor performance with these easy tips...
- S Sport How does Bodyflex work: what is it and how does it work?...
- H Health and Medicine How to Whiten Teeth and Get the Perfect Smile...
- S Style and Beauty How to Properly Apply Eye Makeup: Tips from a Professional Makeup Artist...
- A Auto and Moto How Can Parking Sensors Help Drivers?...
- C Computers and Internet Make Money Online: Secrets and Essential Ways...
- A Auto and Moto What is the Average Lifespan of an Engine in a Car?...
Answers on questions: Business
- B Business If the central bank decreases the amount of reserves banks are required to hold from 20% to 10%, then:...
- B Business Pedro owns a sixplex apartment building and lives in one unit. The building is insured under the Dwelling Property 1 (basic form) policy for $320,000. The replacement cost of the...
- B Business Suppose a firm borrows $100,000 for one year at 9% with interest being paid on a discount basis. The effective rate on the loan would be:...
- B Business Assuming a world population of 5,700,000,000 and an annual growth rate of 1.6 percent, how many people will be added to the world s population in the next year...
- B Business When lending money, a long-term lender is more interested in a company s and indebtedness to other lenders....
- B Business Durango Co. had a beginning cash balance of $4,000, total cash receipts of $110,000 and total cash disbursements of $112,500. The company can borrow in $1,000 increments. If Durango...
- B Business Which of the following taxes is not removed from your paycheck automatically...
- B Business Go SUB TO MY YT CHANNEL Florida_kik For a...
- B Business Juana takes home $5400 per month. What is the maximum amount he can spend each month on loan and credit card payments without being in danger of credit overload? A. $1350 B. $540...
- B Business How much transaction cost per share for trading the 35,000 shares of Avantek would Greg incur relative to the fair value if he sold to Kidder...
Ответ:
a.
P0 = 3.4 * (1+0.05) / (0.08 - 0.05)
P0 = $119
Explanation:
Using the constant growth model of dividend discount model, we can 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+g) / (r - g)
Where,
Do is dividend today g is the growth rate r is the required rate of returna.
P0 = 3.4 * (1+0.05) / (0.08 - 0.05)
P0 = $119
Ответ: