The last dividend (Div0) is $1.80, the growth rate (g) is 6%, and the required rate of return (r) is 12%. What is the stock price according to the constant growth dividend model?
A) $31.80
B) $30.80
C) $30.00
D) $15.00
Answer: A
Explanation: A) The Dividend Growth Model states that P0 = .
Inserting our values gives: P0 = = = = $31.80.
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Mickey Tire Company makes a special kind of racing tire. Variable costs are $220 per unit, and fixed costs are $30,000 per month. Mickey sells 500 units per month at a sales price of $300. If the quality of the tire is upgraded, the company believes it can increase the sales price to $340. If so, the variable cost will increase to $230 per unit, and the fixed costs will rise by 50%. If Mickey decides to upgrade, how will operating income be affected?
A) Operating income will decrease by $15,000. B) Operating income will decrease by $5000. C) Operating income will increase by $5000. D) Operating income will remain the same.
Nonverbal communication does not add meaning to a message
Indicate whether the statement is true or false
When using standard costing, costs are transferred through the production process at their standard costs.
Answer the following statement true (T) or false (F)
Marlin Corporation reported pretax book income of $1,000,000. During the current year, the net reserve for warranties increased by $25,000. In addition, book depreciation exceeded tax depreciation by $100,000. Finally, Marlin subtracted a dividends received deduction of $15,000 in computing its current-year taxable income. Marlin's current income tax expense or benefit would be:
A. $210,000 tax expense. B. $205,800 tax expense. C. $236,250 tax expense. D. $233,100 tax expense.