Question and answer
Winters Hi-Hook Inc., a golf club manufacturer, is currently paying dividends of $.50 per share. These dividends are expected to grow at a 20 percent rate for the next two years and at a three
percent rate thereafter (forever!). What is the value of the stock if the appropriate discount rate is 14 percent?
$6.26 is the value of the stock if the appropriate discount rate is 14 percent. Solution: D1 = D0 (1 + g) = $0.50 (1.20) = $0.60 D2 = D1 (1 + g) = $0.60 (1.20) = $0.72 D3 = D2 (1 + g) = $0.72 (1.03) = $0.74 P2 = D3/(r - g) = $0.74/(0.14 - 0.03) = [ $0.74/0.11 = $6.73 P0 = [D1/(1 + r)] + [D2/(1 + r)2] + [P2/(1 + r)2] = [$0.60/(1.14)] + [$0.72/(1.14)2] + [$6.73/(1.14)2] = $0.526 + $0.554 +
$5.179 = $6.26 ]
Expert answered|emdjay23|Points 1741|
Question
Asked 6/24/2013 6:27:58 PM
0 Answers/Comments
Get an answer
New answers
Rating

There are no new answers.

Comments

There are no comments.

Add an answer or comment
Log in or sign up first.
Questions asked by the same visitor
What is the bank discount rate on a $100,000 face value T-bill priced at $97,500, maturing in 181 days? a. 2.50% b. 4.84% c. 4.97% d. 5.10% e. 5.17%
Weegy: 4.97% is the bank discount rate on a $100,000 face value T-bill priced at $97,500, [ maturing in 181 days. Solution: $100,000 - $ 97,500 361 rd = - - - - - - - - - - - - - - - - X - - - - - - X 100 = 4.97% $100,000 181 ] (More)
Question
Expert Answered
Asked 6/24/2013 6:22:52 PM
0 Answers/Comments
17,179,485 questions answered
Popular Conversations
The political party notifies the people about certain issues, and in ...
Weegy: C. informer-stimulator function is the answer User: Which of the following if NOT a function served by ...
8/29/2014 11:19:03 PM| 3 Answers
The meaning of analysis is A. to dissect. B. absence of ...
Weegy: The meaning of analysis is : a separating into parts. User: A dog lying on its right side is in _______ ...
8/29/2014 11:32:49 PM| 3 Answers
What is passive listening
Weegy: ]
8/29/2014 9:51:30 AM| 2 Answers
The climate and terrain near the Black Sea in Georgia are well suited ...
Weegy: kindly include the choices. thanks!
8/29/2014 10:58:23 AM| 2 Answers
Factor -2bk 2 + 6bk - 2b
Weegy: 2b - 3 = 5. please rate this answer. User: (6x 2 - x - 40) ÷ (5 + 2x) Weegy: The simpified equation is (B) ...
8/29/2014 11:08:33 AM| 2 Answers
Weegy Stuff
S
R
L
1
1
P
C
1
P
1
1
L
P
C
P
C
1
P
C
L
P
C
1
P
C
P
C
Points 2618 [Total 24218]| Ratings 4| Comments 2578| Invitations 0|Offline
S
L
1
L
Points 2311 [Total 6287]| Ratings 8| Comments 2231| Invitations 0|Online
S
L
C
P
C
1
L
L
Points 2191 [Total 15805]| Ratings 13| Comments 2061| Invitations 0|Offline
S
L
P
C
L
P
C
P
C
L
P
C
P
C
P
C
Points 2076 [Total 17103]| Ratings 7| Comments 2006| Invitations 0|Offline
S
L
1
1
1
1
L
1
Points 1927 [Total 9634]| Ratings 2| Comments 1907| Invitations 0|Offline
S
L
P
C
P
C
1
L
P
C
L
P
C
P
C
P
C
P
C
Points 900 [Total 18471]| Ratings 0| Comments 900| Invitations 0|Offline
S
1
L
1
L
P
P
L
Points 563 [Total 11224]| Ratings 1| Comments 553| Invitations 0|Offline
S
1
L
L
Points 558 [Total 5122]| Ratings 0| Comments 558| Invitations 0|Offline
S
Points 430 [Total 633]| Ratings 1| Comments 420| Invitations 0|Offline
S
Points 369 [Total 369]| Ratings 2| Comments 319| Invitations 3|Offline
Home | Contact | Blog | About | Terms | Privacy | Social | ©2014 Purple Inc.