Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. answer the following questions. a. you believe tha

Answer the following questions. a. You believe that a corporation's dividend next year is $5....

50.1K

Verified Solution

Question

Accounting

image

Answer the following questions. a. You believe that a corporation's dividend next year is $5. If the price of the stock is $90, what should be its dividend growth rate assuming a 6 percent required return using the Gordon growth model? b. The current price of a stock is $50 and you plan to sell it in two years. If dividends are expected to be $1.5 per share for the next two years, and the required return is 2%, what should the price of the stock be when you sell it? c. A lottery claims its grand prize is $8 million, payable over 2 years at $4 million per year. If the first payment is made two years from now, what is this grand prize really worth today? Use an interest rate of 2%. d. Assume the nominal interest rate is 12 percent, the expected inflation rate is 5 percent, and the marginal income tax rate is 25 percent. Calculate the after-tax real interest rate

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Let f x 6 tan x 2e What is f 7 h

Calculus
Q

Use the following information to answer the questions below. CATERPILLAR INC. Statement of Income for a...

Accounting
Q

In a patient with ___________ an infusion of ________ saline could be therapeutic or helpful. A....

Medical Sciences
Q

The Sarbanes Oxley Act is sometimes described as the "full-employment act for accountancy." Why do you...

Accounting
Q

36 Arrange the following materials in the increasing order of their resistivity Copper Platinum Silver...

Physics
Q

53 sphere of uniform density and 4 m Its centre is at the origin of...

Physics
Q

All societies face a trade off between efficiency and equality If the government lowers income...

Basic Math
Q

0 Name one way in which the parabolas shown here are DIFFERENT VE Share With...

Basic Math
Q

My investment portfolio consists of 50% equities, 20% fixed income, 15% real estate, and 5%...

Accounting
Q

Identify four risks associated with IT systems in accounting. For each of the four risks,...

Accounting
Q

Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors...

Accounting
Q

PROBLEM 6: Valuation of Common Stock A dividend of $0.72 will be paid by Fiper...

Finance