A corporation will pay a dividend of $1.75 per share at this years end and a dividend of $2.25 per share at the end of next year. It is expected that the price of its stock will be $42 per share after two years. If the firm has an equity cost of capital of 9%, what is the maximum price that a prudent investor would be willing to pay for a share of the stock today?

Q: Find the nominal rate compounded quarterly which is equivalent to 12% compounded semimonthly. O…

A: First we need to use effective annual rate formula to calculate nominal rate Effective annual rate…

Q: The MARR is 6% per year. The annual worth of company 2 cash flow estimates is closest to: Note that…

A: Cash flow Diagram:

Q: A business is deciding whether to give an end-of-year bonus of $5000 each year for the next four…

A: End of year bonus (B) = $5,000 Bonus period (p) = 4 years Discount rate (r) = 0.07 Present value…

Q: How much would you pay for a zero coupon bond with a par value of $1000, a maturity of 21 years, if…

A: Zero coupon bond is a type of bond which will not pay with any coupon payment and it will only pay…

Q: (Bond valuation) A bond that matures in 15years has a ​$1,000 par value. The annual coupon interest…

A: Maturity period (p) = 15 years Par value or maturity value (Z) = $1,000 Coupon rate = 0.13 or 13%…

Q: Which of the following portfolios achieves the highest Sharpe ratio? (check all that applies)…

A: Sharpe ratio of portfolio indicates the how much is the performance of portfolio based on the the…

Q: 73. The price of a gadget depreciates proportional to its prevailing price at any time. If in 2018,…

A: Depreciable cost:  Property that offers an economic advantage for more than one reporting period is…

Q: A demand loan for $9665.94 with interest at 7.6% compounded quarterly is repaid after 4 years, 11…

A: Compounding can be done annually or more frequently like semi annually, quarterly, monthly, weekly…

Q: Why you have not taken depreciation(deduct from profit and then add to obtain cash flows) into accou

A: Depreciation   is a admissible expenses  for taxation purpose i.e., tax will be calculated on the…

Q: The company recently invested in a project that has an expected annual cash inflow of P700,000 for…

A: The payback period represents the period that a project takes to recoup the initial investment. The…

Q: A stock just paid an annual dividend of $7.75 per share. The expected growth rate of the dividend is…

A: Growth rate = 0.1012 or 10.12% Required rate of return = 0.1197 or 11.97% Dividend yield = ?…

Q: Suppose health-care reform Y makes it unlawful for insurance companies to deny insurance to persons…

A: In finance when health care related policies are implemented then a cost benefit analysis is done by…

Q: ABC Corporation has the following information to estimate its liquidation value. Cash = 50,000…

A: Net liquidation value of the corporation will be the difference between all realised assets and net…

Q: A Gateway Inc. has an issue of preferred stock that pays $3.40 dividend every year in perpetuity. If…

A: Annual dividend (D) = $3.40 Current price (P0) = $91 Required return (r) = ?   Required return is…

Q: Dividend policy determines the ratio between the earnings distributed to shareholders and the…

A: Dividend policy is referred as the dividend distribution, which has the guidelines that actually…

Q: ThegreatAlbertEinsteinoncesaid“Compoundinterestistheeighthwonderofthe world. He who understands it…

A: Information Provided: Principal = $500 Years = 30 Interest rate = 15%   NOTE: As per our policy,…

Q: Calculate the value of the bond. b.  How does the value change if the​ market's required yield to…

A: Information Provided: Coupon rate = $70 Par value = $1000 Bond maturity = 18 years YTM on…

Q: Use the Constant Dividend Growth Model to determine the expected annual growth rate of the dividend…

A: Dividend in one year (D1) = $8.9 Current stock price (P0) = $144.48 Annual rate of return (r) =…

Q: The Riverside Company is evaluating two mutually exclusive assets: Black and White, at the end of…

A: The profitability index is capital budgeting method which will help in selecting project on the…

Q: Finance You are an investor who is looking to invest into a fund. Given the following investment…

A:

Q: N = 1% = PV = PMT= FV = C. The Lees have purchased a new home for $360,000, and put a down payment…

A: Hi, since you have posted multiple questions, we will answer the first one, as per authoring…

Q: Colgate-Palmolive Company has just paid an annual dividend of $0.91. Analysts are predicting an…

A: As per the given information: Annual -dividend paid = $0.91Growth rate in earnings over the next…

Q: Tulsa Company is considering investing in new bottling equipment and has two options: Option A has a…

A: The Net Present value is calculated with the help of following formula  Net Present Value = Present…

Q: Which of the following statement(s) are true? a   By adding more stocks to my portfolio, I can…

A: One of the most popular ways to determine a risk-adjusted return is through the use of the Sharpe…

Q: ABC Corporation plans to purchase a call option for 1,000 Red Corp. ordinary shares at a strike…

A: Black Scholes Model is used to calculate the value of a call option and requires 5 variables to…

Q: Based on the following data for the current year, what is the number of days' sales in inventory?…

A: Days sales in inventory = 365/(cost of goods sold/Average inventory)  Average inventory = (Opening…

Q: Two debts, the first of $1900 due three months ago and the second of $1600 borrowed two years ago…

A: Let us calculate the FV, one year from now of the first debt worth $1900 due 3 months ago.FV = PV x…

Q: East Mid West -outh West Grand Total 8000 7000 6000 5000 4000 29 $ 55 $ 23 $ 93 $ 200 $ 1,921.75…

A: The charts and graphs are very important for understanding the performance of company overall during…

Q: If $15,000 is invested at 3.5% for 20 years, find the future value if the interest is compounded the…

A: Initial investment (I) = $15,000 Interest rate (r) = 0.035 or 3.5% Period (t) = 20 years Future…

Q: What are the three rights associated with real estate? List them in the first sentence. Then…

A: There are total 5 rights which the Title holder of the real estate have. These are listed as below:…

Q: Explain how increases and decreases in exchange rates between 2 countries might impact business and…

A: Exchange rate is referred as the rate, where one currency will get exchanged with regard to another…

Q: Monique Gonzales just graduated and was hired by a new cybersecurity firm in Colorado. She needs to…

A: The Hurwicz criterion: The Hurwicz criterion is a tool that aids decision-making under uncertainty.…

Q: Westpac pays a current dividend of $0.5, which is expected to grow at a rate of 4% indefinitely. The…

A: Current value of a share is the present value of future dividends and future price of the share;…

Q: hanks for your clarifications. Additional investment in working capital of $90,000 will be required…

A: Working capital is required for the new projects and the but it is temporary cash flow required no…

Q: Summarize the roles of individual/position (Organizational structure) involve in the decision making…

A: A successful firm is built on the duties and responsibilities of its employees. As the company's…

Q: What is the net present value (NPV) of your proposed expansion into the Canada? Assume that the cash…

A: Net Present Value: A set of cash flows that happen at various dates are considered to have a net…

Q: Diane Carter is interested in buying a five-year zero coupon bond with a face value of $1,000. She…

A: Given, Face value of bond is $1000 Interest rate is 9%

Q: ABC Company reported in 2021 sales of P15,000,000, an asset turnover ratio of 3.0, and a rate of…

A: Asset turnover ratio = Sales/Average total assets Return on average assets = Net income/Average…

Q: Nick's Enchiladas has preferred stock outstanding that pays a dividend of $3 at the end of each…

A: A fixed rate of dividend is guaranteed to preferred shareholders. Although there is no legal…

Q: Melanie founded her company using $250,000 of her own money, issuing herself 100,000 shares of…

A: To calculate the percentage of ownership we will use the below formula   Percentage of the ownership…

Q: Suppose an investor purchases a 3-month call option and a 3-month put option on ABC stock. The the…

A: The options gives the opportunity to buy or sell the stock on expiration by payment of premium but…

Q: Your company borrows $500,000 from a bank to finance the purchase of a new machine. The nominal…

A: First let us calculate the 4 equal half yearly payments that need to be made. This can be calculated…

Q: - The P 1,000,000 face value ABC bond has a coupon rate of 6%, with interest paid annually, and…

A: Given, The face value of bond is P 1,000,000. (1000 thousand) Coupon rate is 6% term to maturity is…

Q: What is the estimated current price of a share of ABC Company stock based on the Constant Dividend…

A: Constant Dividend Growth Model Current price = D1 /(Ke - g) Where D1 = Next expected dividend D1 =…

Q: Question 32 The phrase, "bad risks drive good risks out of the market" refers to the effect of which…

A: Good risk and bad risk When all the possible outcomes can be weighted and based on that, one is able…

Q: What's the equation and answer in excel?

A: Information Provided: Dividend Paid (D0) = $1.95 Growth rate = 3.15% Required return = 8%

Q: How did you find the taxable income in part a

A: Taxable income is the income that is subjected to tax. It is the amount of sales as reduced by cost…

Q: A writer sells 100 call options with strike $46 for $0.94 each and deposits these premiums in a…

A: A writer receives the premium for the call option sold. He receives $0.94 per option.The amount he…

Q: In 2016, AT&T issued 10-year bonds with a coupon that pays $93.75 annually. At the time of issue,…

A: Here, To Find: Current price of the bonds =?

Q: Company B uses $800,000 of its accounts receivables as collateral when the company borrowed…

A: The accounts receivable refers to the amounts due from customers for the goods and services provided…