Business College

The next dividend payment by ASAP, Inc., will be $2.00 per share. The dividends are anticipated to maintain a 4.00% growth rate, forever. If ASAP stock currently sells for $14.75 per share, what is the required return?

Answers

Answer 1

Answer:

r = 0.175593 or 17.5593% rounded off to 17.56%

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 = D1 / (r - g)

Where,

D1 is dividend expected for the next period /year g is the growth rate r is the required rate of return  

Plugging in the values for D1, P0 and g, we can calculate the value of r to be,

14.75 = 2 / (r - 0.04)

14.75 * (r - 0.04)  =  2

14.75r - 0.59  =  2

14.75r = 2 + 0.59

r = 2.59  /  14.75

r = 0.175593 or 17.5593% rounded off to 17.56%

Related Questions

Project L costs $70,000, its expected cash inflows are $16,000 per year for 8 years, and its WACC is 13%. What is the project's discounted payback?

Answers

Answer:

6.89 years

Explanation:

The discounted payback period can be calculated by using the following table

Year        Cash flows                PV(13%)             Cumulative Cash flows

0               (70000)                    (70000)                           (70000)

1           16000                    14159.29                       (55840.71)

2           16000                    12530.35                      (43310.36)

3           16000                       11088.80                      (32221.56)

4           16000                        9813.10                        (22408.46)

5           16000                        8684.16                        (13724.30)

6           16000                         7685.10                       (6039.20)

7           16000                          6800.97                         761.77

8           16000                          6018.56                       6780.33

Discounted Payback = 6 years + 6039/ 6801

Discounted Payback = 6.89 years

Prices for airline tickets change on average about once per month. This would suggest that airline ticket prices are

Answers

Answer:

relatively flexible

Explanation:

Flexible pricing is when there is room for negotiation of prices of a product between the buyers and sellers.

So the price is prone to change in short amount of time.

Sticky price on the other hand tends to be non negotiable and the does not change over time.in the given scenario prices for airline tickets change on average about once per month.

So there is constant change of the price every month. Meaning the buyer can convince the seller to change his offering price.

The price is relatively flexible

A part of a business's message that distinguishes it from all its competitors
is referred to as what?
A. Cultural sensitivity
B. Unique selling proposition
C. Superiority clause
D. Isolation technique

Answers

Answer:

Unique selling proposition.

Answer:b

Explanation:

Other Questions
Find the value of x that makes m n . 1)) The average depth of a lake is 10 meters. Do you think sunlight acts a limiting factor the same way it does in the ocean? Why or why not?2)An area with a high population of crayfish in local lakes and rivers has begun experiencing acid rain, rain that has a pH of 3.0 - 4.0. Predict how this rain will impact the crayfish population. all of these bodies of water are associated with the continent of africa except one. which of these is not found in Africa?A. Nile river B. Atlantic oceanC. Huang he riverD. Mediterranean river Please answer correctly and quickly*Thank You* Find the area of the shape shown below Your goal is to earn an annual salary of $100,000 three years from now. You expect to increase your salary by 6.5 percent annually. How much do you need to earn this year if you are going to reach your goal?a. $72,988.08b. $82,784.91 c. $87,878.88 d. $84,363.13 What value of makes the statement true? cos()=sin(/310) round 803 to the nearest ten. Enter your answer in the box below. what does the author want readers to understand about popularity and bullying Turner took a total of 8 quizzes over the course of 4 weeks. How many weeks of school will Turner have to attend this quarter before he will have taken a total of 16 quizzes? Assume the relationship is directly proportional. plz just put the answer Who killed king von? if yall know yall brainliest Which is NOT true A. Vent organisms thrive in high levels of sulfuric acid B. photosynthesis probably evolved before chemosynthesis C. vent communities can thrive at temperatures greater than 700 F D. Vent organisms thrive at 1000 times surface atmosphere pressure Whats is the authors position about violence in the movies in the Point selection, Hollywood, Stop Exposing Our Kids to Violence!? Cite textual evidence to explain your understanding. write 28 + 24 as a product of two factors using the GCF and the distributive property If you bake 3/4 of a cake in 5/6 of an hour, how long does it take to bake 18 cakes a b c d ?? help me pleas and ty What do you mean by inclusiveness? Which of the following are true about cancer? Check all that apply.Cancer cells display contact inhibition.Cancer is contagious.Cancer cells divide uncontrollably.Cancer can spread around the body.Cancer comes in many forms.Cancer affects only the elderly.Cancer cells invade healthy tissue.Cancer does not obey contact inhibition. 7 (3 - 0.5k) 3k - 5 Shelly's Boutique had a Labor Day sale featuring 25% off any item. Tammy wanted to buy a blouse that originally sold for $21.99. To the nearest cent, how much will it cost her before tax to buy the blouse during the sale? Find three consecutive even integers suchethat one half of their sum is between 15and 21.