In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the terminal stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.70. The dividends are expected to grow at 20 percent over the next five years. In five years, the estimated payout ratio is 34 percent and the benchmark PE ratio is 32. a. What is the target stock price in five years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the stock price today assuming a required return of 11 percent on this stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Stock price in 5 years b. Stock price today

Answers

Answer 1

a. Target stock price in five years Dividend growth rate = 20%  Dividend payment this year = $1.70  Dividend paid at the end of 1st year = $1.70 × (1 + 20%) = $2.04

Dividend paid at the end of 2nd year = $2.04 × (1 + 20%) = $2.45  Dividend paid at the end of 3rd year = $2.45 × (1 + 20%) = $2.94  Dividend paid at the end of 4th year = $2.94 × (1 + 20%) = $3.53

Dividend paid at the end of 5th year = $3.53 × (1 + 20%) = $4.24

Dividend payout ratio after 5 years = 34%

Benchmark PE ratio = 32

Expected price-to-earnings ratio (P/E) = 1 / (0.11 - 0.20) = -12.50

Ending stock price (in 5 years) = $4.24 × (1 + 34%) / (0.11 - 0.34)

= -$97.94

Given that the expected price-to-earnings ratio is negative, it indicates that the share price is expected to fall. Therefore, we cannot use the above formula for this question.

b. Stock price today

Dividend payment this year = $1.70  

Dividend paid at the end of 1st year = $2.04

 Dividend paid at the end of 2nd year = $2.45

 Dividend paid at the end of 3rd year = $2.94

 Dividend paid at the end of 4th year = $3.53

 Dividend paid at the end of 5th year = $4.24  

Dividend payout ratio after 5 years = 34%

Benchmark PE ratio = 32

Expected price-to-earnings ratio (P/E) = 1 / (0.11 - 0.20) = -12.50

 Ending stock price (in 5 years) = $4.24 × (1 + 34%) / (0.11 - 0.34)

= -$97.94  

Present value of expected future dividends

= $2.04 / (1 + 0.11) + $2.45 / (1 + 0.11)² + $2.94 / (1 + 0.11)³ + $3.53 / (1 + 0.11)⁴ + $4.24 / (1 + 0.11)⁵

= $10.94  

 Present value of the ending stock price

= $97.94 / (1 + 0.11)⁵

= $49.26

Present value of the stock

= $10.94 + $49.26

= $60.20

Therefore, the stock price today assuming a required return of 11 percent on this stock is $60.20.

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Related Questions

What does indigenous technology mean?​

Answers

Answer: I hope this is helpful mark brainlist if right then no if wrong

Explanation:

Indigenous technology is used by the native inhabitants of a country or region and it constitutes an important part of its cultural heritage. Characteristically, indigenous technologies: Are recognized as animate, imbued with the breath of life and they live in form and function.Technologies employed by the native inhabitants of a country and which constitute an important part of its cultural heritage and should therefore be protected against exploitation by industrialized countries; the problem of indigenous knowledge has been discussed during the Rio Conference but it does not receive much ...Types of indigenous technology in India are; (i) Generic Drugs. (ii) Thorium based Nuclear Reactors. (iii) Plastic RoadsIndigenous Technology is created within a sensory environment that builds on our sense of relationship, meaning, balance, feeling, memory and place as well as sight, sound, smell, taste and touchIndigenization is the process by which Indigenous ways of knowing, being, doing and relating are incorporated into educational, organizational, cultural and social structures of the institution.One example of Indigenous Technologies in action today can be witnessed in differential approaches to medicine. Medical technologies in the Western Scientific sense of the term might conjure images of biomedical research labs, electromagnetic monitors or imaging systems such as CT or MRI scans.Indigenous technology is used by the native inhabitants of a country or region and it constitutes an important part of its cultural heritage. Characteristically, indigenous technologies: Are recognized as animate, imbued with the breath of life and they live in form and function.

What are the equilibrium price and quantity of yo-yos?
Price Qd Qs
$1 100 10
$2 80 35
$3 60 60
$4 40 85
$5 20 110

Answers

3 dollars as qd =qs no surplus or shortage

block grants are designed to a. give the states more control in how they spend federal funds. b. fund urban improvements on specific city blocks. c. fund capital improvements in schools. d. impose strict limits on how state governments can spend money from the federal government.

Answers

Block grants fund many various programs. Frequently, these programs embrace those designed to produce support to lower financial gain families; they offer support for mental state and social services.

Block grants are funds from the central to the state/local government. They apply to broad payment classes and fund a good variety of programs at the state's discretion.

There are several variations between categorical grants and block grants. Categorical grants are grants given to states from the center for specific functions. Block grants, however, are grants given to the states from the center for additional broad payment classes with fewer "strings" connected.

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A healthcare organization’s insurance coverage is:

the amount that the insurance company will pay for costs associated with risks

the amount that the healthcare organization pays to the insurance company

the amount that the healthcare organization pays for costs associated with risks

the amount that the healthcare organization will pay for a legal case

Answers

Answer:

A

Explanation:

the answer to this question is a

Answer:

A

Explanation:

- the amount that the insurance company will pay for costs associated with risks

correct on Edge

Which diagram best represents these elements of the Word window?





Mark this and return

Answers

Answer:

Explanation:

Option B

If a person has $1,000 in a savings account and earns $20 a year in interest on that account, the rate of return on the money is close to

Answers

Answer:

2%

Explanation:

Help!

Which federal agency oversees how clean and how appropriately a restaurants prepare and store foods?

Answers

Answer:

FDA's Center for Food Safety and Applied Nutrition (CFSAN) seeks to ensure that these foods are safe, sanitary, nutritious, wholesome, and honestly and adequately labeled.

Explanation:

FDA center that is the answer don’t know if this is exactly what u wanted

which word best describes the writing process in business writing ?

Answers

Answer: Brainstorm Pre-write. Write rough draft. Peer-review. Revise ideas. Edit Publish Establish constructive purposes for student writing. Find real audiences, beyond the teacher, for students' writing

What are three important of trade agreements?

Answers

Free trade agreements provide chances for both large and small Australian firms to profit from increased trade and investment, which in turn boosts economic activity & job creation in Australia.

What are the 3 trade agreements?

Regional trade agreements include the European Union (EU), Asia-Pacific Economic Cooperation, Central American Free Trade Agreement (CAFTA-DR), and North American Free Trade Agreement (NAFTA) (APEC).

Free trade agreements (FTAs) enable manufacturers and exporters in the United States increase their access to international markets. Trade obstacles are removed via bilateral and international agreements, tariffs are lowered or eliminated, and economic progress is encouraged. Through trade, countries may expand their markets and receive goods and services that would otherwise not be available locally.

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Which of the following countries did not trade with the Phoenicians?
O Babylonia
Japan
O Egypt
Greece

Answers

The correct answer is:

Japan

To make sure that its customers are satisfied and to probe for new product ideas, Intuit routinely sends employees to the facilities of their customers. This technique for generating new business ideas is called ________. Group of answer choices focus group survey customer advisory board brainstorming day-in-the-life research

Answers

The answer is day-in-the-life research.

To make sure that its customers are satisfied and to probe for new product ideas, Intuit routinely sends employees to the facilities of their customers. This technique for generating new business ideas is called Day-in-the-life research.

This technique is an ethnographic analysis in which a researcher takes a consumer through a typical day and examines them. The purpose of this activity is to show only routine activities and ordinary things understood by users out of habit and unknowingly by the user. The regular variability of commercial ingenuity outweighs the differences in personal innovation. Companies that focus on solving external problems produce more new ideas.

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chapman chairs, a family-owned corporation, declared and distributed a property dividend from its overstocked inventory in place of its usual cash dividend. the inventory's book value exceeded its fair value. the excess is

Answers

Chapman chairs, a family-owned corporation, declared and distributed a property dividend from its overstocked inventory in place of its usual cash dividend. the inventory's book value exceeded its fair value. the excess is revealed as a misfortune.

A property profit is recorded at the fair worth of the resources disseminated. This might require revaluing the resources preceding recording the profit which can deliver an increase or misfortune.

What is mishap throughout everyday life?

Incident means misfortune or the condition of having misfortune. Break hardship into its parts and you get mis-meaning terrible and fortune significance possibility or karma. In some cases, it can feel like adversity follows you. Picture it as a desolate mystic named "Miss Fortune" who can see the terrible things in your future.

What would it be advisable for us to do in our disasters?

Despite disaster, we shouldn't enjoy self-oppression and demonstrations of censuring oneself. All things being equal, we should do what is sensible for the time, be finished with. Persistent concern is based on unfortunate feelings that serve nothing for the person in question. Life, for a certain something, doesn't necessarily in all cases guarantee satisfaction.

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Which of the following is NOT consistent with points along the long-run aggregate supply curve? Select one: Real GDP is growing at its long-run potential growth rate. All prices are fully flexible. All real factors of production are being fully utilized. Real output growth is negatively related to inflation.

Answers

Real output growth is negatively related to inflation is NOT consistent with points along the long-run aggregate supply curve.

The statement that is NOT consistent with points along the long-run aggregate supply curve is: Real output growth is negatively related to inflation. In the long-run, aggregate supply is not affected by the inflation rate, as it is determined by the economy's productive capacity and the full utilization of its factors of production.

Inflation is a term used to describe the rate at which the general level of prices for goods and services in an economy is increasing over time. In other words, it is the rate at which the purchasing power of money is declining.

Inflation can be caused by a variety of factors, including an increase in the supply of money, an increase in demand for goods and services, or a decrease in the supply of goods and services. Inflation can also be affected by external factors such as changes in international trade, changes in commodity prices, or changes in exchange rates.

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how does marmite use product differentiation

Answers

Marmite use product differentiation as viewed as having unique features, such as Marmite or the iPhone. It frequently referred to as a differentiator.

What do you mean by the product differentiation?

The feature or features that set your product or service apart from the competition for your target market are known as product differentiation.

It improves brand loyalty, sales, and growth by highlighting the differences between what you sell and what your rivals provide. These comprise vertical differentiation, mixed differentiation, and horizontal differentiation.

In the financial situation of today, product differentiation is crucial. It enables the seller to highlight the distinctive qualities that make their product outstanding by drawing comparisons between their own product and those of the market's rival products.

Therefore, Marmite use product differentiation as viewed as having unique features, such as Marmite or the iPhone. It frequently referred to as a differentiator.

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What is the 3rd party confidential hotline that the board has established for employees to use to report conflicts of interest or other ethical concerns?.

Answers

For workers to use in reporting conflicts of interest or other ethical problems for Bend ISD, the Board has established the SAFE hotline as a third party confidential hotline.

Employees and other interested parties can report potential fraud, ethics violations, and other issues in a private, confidential manner to SAFE Hotline, an independent third-party Ethics Hotline provider.

Both for-profit businesses and nonprofits can use SAFE Hotline. The service is a useful tool to assist find incidents before the business loses money, assets are taken, there are legal implications, or its reputation is affected.

A case management tool can assist your company keep track of, go through, and add case notes and SAFE Hotline documents to submitted reports. The case management system also enables you to restrict user access to only the cases they are presently investigating.

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A manager who involves members of the team in decisions is using which management style?
A.
Authoritarian
B.
Hands-off
C.
Participative
D.
Autocratic

Answers

Answer:

c.

Explanation:

Answer:

i think its c) to

Explanation:

what is the internet

Answers

Answer:

the internet is a vast network that connects computers all over the world.

Explanation:

says the internet

22. in 2017, fbla is celebrating how many years of excellence?

Answers

In 2017, FBLA, which stands for Future Business Leaders of America, was celebrating its 75th year of excellence. FBLA is the largest student-run organization in the United States, with over 250,000 members across the country.

The organization provides students with opportunities to develop leadership skills, explore career paths in business and finance, and compete in various events and competitions.

FBLA was founded in 1942 as the Future Business Leaders of America Club by a group of business teachers in Johnson City, Tennessee. Over the years, the organization has grown significantly, expanding its reach to include students in middle schools, high schools, and colleges across the country.

To commemorate the 75th anniversary, FBLA launched a campaign called "Celebrate 75" to honor the organization's rich history and its impact on the lives of millions of students. The campaign included events, contests, and other initiatives that brought together FBLA members, alumni, and supporters from across the country to celebrate this milestone achievement.

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what is entrepreneur ​

Answers

Answer: An entrepreneur is a person who creates a new business venture with all the possible risks. He is the person who brings an idea to the table for a new business. Then he acquires resources, labor, and capital to set up the business, produce goods and services

Explanation: Hope this was helpful

Establishing an online professional network is an important tool for locating career opportunities in the twenty-first century.


False

True

Answers

Answer:

I say your answer option is true. I'm so sorry if my answer ends up being wrong. I tired my best

Establishing an online professional network is an important tool for locating career opportunities in

Answer:TRUE

Explanation:

what is the biggest health concern for employees of this company when it comes to technology
and what is a strategy the company could put in place to lower this risk?
Yelppp

Answers

Answer:Robots replace humans

Explanation:tjeteare will always remains some jobs woch can be done only by human hand.

01-020 - Analysts enjoy the fun and thrill of ____.

Answers

To uncover patterns, trends, and insights that might aid in decision-making and planning, analysts do research and analyze publicly available or privately obtained data.

Three essential skills that a successful business analyst must possess are critical thinking, problem-solving, and decision-making. Additionally advantageous are management abilities and expertise of the firm or sector.

Most consulting businesses and investment banking firms utilize the job titles associate and analyst. They make up the top two levels of the hierarchy, which is then followed by Managing Director, Senior Vice President, Associate Vice President, Vice President, and Vice President.

Great analysts are skilled at communicating their results to a wide range of audiences. They can assist any department in the organization in comprehending the significance of the data. They are more than simply figure crunchers; they can persuade others to accept the conclusions. Only when insights motivate action are they truly meaningful.

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Actual Question - Analysts enjoy the fun and thrill of Explanation.

How important is money

Answers

Answer:

very important

Explanation:

money is a global income source for everyone. we all have different types but it is all still money. now say one country got rid of money and had people pay for stuff using other things. if china did that lots of different countries wouldn't be able to get stuff from there unless they had so much of that product they could just give it up.

which viability factor involves building relationships with a experienced professionals

Answers

Relationship factor helps in building relationships with a experienced professionals.

Give a brief account on Business viability.

Viability means that the business is (or may be) successful. A viable business is profitable, meaning it generates more revenue than you spend running it. If a company is not profitable, it is difficult to recover. Companies need to increase sales, reduce costs, or both. Profitability is closely related to solvency and liquidity as well as profit.

There are two processes to creating a profitable business. First, it means formulating a marketing strategy by knowing who you are, who you sell to, and who else you sell to. Second, it means your financial home is in order.  

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Which of the following does NOT describe an approach for buying national brand merchandise?
A. Buyers meet national brand vendors in wholesale market centers.
B. Buyers attend trade shows to see the latest products and styles.
C. Buyers using reverse auctions.
D. Buyers discuss the performance of the vendor's merchandise during the previous season during
market weeks.
E. Vendors meet with buyers at their offices to review and reorder last week's best sellers.

Answers

The correct answer is C. Buyers using reverse auctions does not describe an approach for buying national brand merchandise. Reverse auctions involve suppliers bidding against each other to win a buyer's business, and this is more commonly used for procuring goods or services from a wide range of suppliers.

When it comes to buying national brand merchandise, buyers typically meet national brand vendors in wholesale market centers, attend trade shows to see the latest products and styles, discuss the performance of the vendor's merchandise during the previous season during market weeks, and vendors meet with buyers at their offices to review and reorder last week's best sellers. These approaches allow buyers to negotiate pricing, explore new products, and build relationships with vendors to ensure that their stores have the most popular and profitable merchandise available for customers.

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Xanadu Industries manufactures and sells the same calipers as Utopia Industries. Employee wages account for 35 percent of the cost of manufacturing calipers at both Xanadu Industries and Utopia Industries. Xanadu Industries is seeking a competitive advantage over Utopia Industries. Richard, the manager put in charge of devising a strategy to meet this end, suggests lowering employee wages. This leads to a grave conflict between Richard and the labor union. Which of the following, if true, would suggest that the labor union will accept Richard's suggestion to lower the wages?
A) As they make a large number of precision instruments, caliper manufacturers receive huge volume discounts on raw materials.
B) Utopia Industries recently set up a new manufacturing facility in the vicinity.
C) Xanadu Industries has taken away 20 percent of Utopia Industries' business over the last year.
D) Utopia Industries pays its employees, on average, 10 percent more than does Xanadu Industries.
E) Many people who work for manufacturing plants live in areas in which the manufacturing plant is the only source of employment.

Answers

Answer: E) Many people who work for manufacturing plants live in areas in which the manufacturing plant is the only source of employment.

Explanation:

The scenario that'll make the labor union accept Richard's suggestion to lower the wages is when many people who work for manufacturing plants live in areas in which the manufacturing plant is the only source of employment.

The reduction in wages by Xanadu Industries wouldn't bring about loss.of workers as the manufacturing plant is the only industry in the area. Another way the company can reduce cost is through the reduction in its raw materials cost. If the employees aren't satisfied due to the reduction in wages, they can look for employment at Utopia Industry.

Therefore, the correct option is E.

The profit remaining after subtracting the cost of bringing the goods into the store and the operating expenses from the sale of the goods.

Answers

The profit remaining after subtracting the cost of bringing the goods into the store and the operating expenses from the sale of the goods is known as "net profit." Net profit is an important financial metric for businesses, as it indicates the company's overall financial health and profitability.


To calculate net profit, one must consider various costs and expenses incurred in the business operation. Firstly, the cost of bringing goods into the store, also called the cost of goods sold (COGS), should be considered. This includes expenses like purchasing the products, shipping, and storage.

Secondly, operating expenses need to be taken into account. These include expenses associated with running the business, such as rent, utilities, salaries, and marketing efforts. Once you have the total costs and expenses, subtract them from the total sales revenue generated by selling the goods.Net profit = Sales revenue - (Cost of goods sold + Operating expenses)Understanding net profit is essential for businesses to make informed decisions about pricing, investments, and expansion.

By maximizing net profit, companies can increase their financial stability, reinvest in the business, and provide a return on investment for stakeholders. However, it's crucial to maintain a balance between cost reduction and maintaining product quality, as focusing solely on increasing net profit can lead to decreased customer satisfaction and long-term negative impacts on the business.

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Please help worth bonus points!

Please help worth bonus points!

Answers

Answer:

the 4th and 5th one is for france

Explanation:

this is done in france France, it is called french silver service, it's a method of food service at the table, it's known as à l'anglaise (English service)

4=the staff utilizes platters to serve cooked food

5=the last one

1= america, the first one.

2=Russia

3=russia

if I got anything mixed up, pls inform me.

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of
$322,500; materials of $405,000 and direct labor of $215,000. During the year Adams incurred $413,000 in materials costs, $414,800 in overhead costs and
$219,000 in direct labor costs. Compute the predetermined overhead rate.

Answers

Answer:

150%

Explanation:

Computation of the predetermined overhead rate

Using this formula

Predetermined overhead rate=Estimated overhead/Estimated direct labor cost

Let plug in the formula

Predetermined overhead rate=$322,500/ $215,000

Predetermined overhead rate=1.5*100

Predetermined overhead rate=150%

Therefore Predetermined overhead rate will be 150%

explain the process involve in forming a company.

include these points:

1. Often require more time and legal works.

2. Need to complete all required documents such as ARTICLE OF ASSOCIATION and MEMORANDUM OF ASSOCIATION.

3. Once all document is ready, the register of the company issues the Certification of incorporation.

4. Certification of incorporation certifies the legal status of the company and allows to start trading.​

Answers

Forming a company involves a number of steps and can often require more time and legal work than other types of business structures. Here are the steps typically involved in forming a company:

How to fporm company

Choose a Business Name: The first step is to choose a business name that is not already in use by another company. It's important to conduct a search to ensure the name is not already taken.

Decide on Company Structure: The next step is to decide on the legal structure of the company, such as a corporation, LLC, or partnership.

Prepare the Required Documents: Once the structure has been chosen, the required documents such as ARTICLE OF ASSOCIATION and MEMORANDUM OF ASSOCIATION must be completed. These documents outline the purpose of the company, its ownership structure, and other important details.

File Documents with the Register of Companies: The completed documents must then be filed with the register of the company in the jurisdiction where the company is to be incorporated. This requires paying a fee and providing additional information about the company, such as the names and addresses of directors and shareholders.

Certification of Incorporation: Once all the required documents have been submitted and approved, the register of the company issues a Certification of Incorporation. This certificate certifies the legal status of the company and allows it to start trading.

Obtain Business Licenses and Permits: Depending on the type of business and the jurisdiction, the company may also need to obtain additional licenses and permits before it can begin operating legally.

Overall, forming a company involves a significant amount of legal work and documentation, but it provides the benefit of limited liability and can make it easier to raise capital and attract investors.

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