A share just paid a dividend of $2 yesterday. It is expected that a dividend will...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A share just paid a dividend of $2 yesterday. It is expected that a dividend will be paid at the end of each year. The growth rate for the dividend would be 15% p.a. for the first 2 years, 20% p.a. for the third and the fourth year. From the end of year 4, the annual dividend will grow at a constant rate of 4% p.a. forever. The rate of return is 13% p.a. The following formula is used to calculate the price of the share today (Po). D4 Po = D1 (1+ R) + Dz (1+ R)2 2 + D3 (1+ R)³ R-g + (1+R)n Calculate the following variables in the above formulas. The variables may or may not be the same value. For money amounts, round your answer to the nearest cent. Do not include $. Do not use comma separators. For example, 1234.56 would be the correct format. For percentages, round your answer to the nearest 0.01% (2dp). Do not include the % symbol. Do not use comma separators. For example, if your answer in decimal is 0.123456, 12.35 would be the correct format. For n, show your answer as an integer (positive or negative or zero). Do not include units like "years" or "months" (number only). Do not use comma separators. For example, 123456 would be the correct format. A share just paid a dividend of $2 yesterday. It is expected that a dividend will be paid at the end of each year. The growth rate for the dividend would be 15% p.a. for the first 2 years, 20% p.a. for the third and the fourth year. From the end of year 4, the annual dividend will grow at a constant rate of 4% p.a. forever. The rate of return is 13% p.a. The following formula is used to calculate the price of the share today (Po). D4 Po = D1 (1+ R) + Dz (1+ R)2 2 + D3 (1+ R)³ R-g + (1+R)n Calculate the following variables in the above formulas. The variables may or may not be the same value. For money amounts, round your answer to the nearest cent. Do not include $. Do not use comma separators. For example, 1234.56 would be the correct format. For percentages, round your answer to the nearest 0.01% (2dp). Do not include the % symbol. Do not use comma separators. For example, if your answer in decimal is 0.123456, 12.35 would be the correct format. For n, show your answer as an integer (positive or negative or zero). Do not include units like "years" or "months" (number only). Do not use comma separators. For example, 123456 would be the correct format.
Expert Answer:
Answer rating: 100% (QA)
Lets break down the problem and calculate the variables step by step Given data Dividend at the end ... View the full answer
Related Book For
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
Students also viewed these finance questions
-
a. Stock market index information: S&P 500 (stock) index level: Nasdaq Composite (stock) index level: b. Interest rate information : Prime rate: Federal funds rate: Commercial paper rate (90 days):...
-
In the fall of Year 5, eight wealthy business people from the same ethnic back ground formed a committee (CKER committee) to obtain a radio license from the Canadian Radio-Television and...
-
To be more engaged in your community, think of any issues that the youth today are facing, then find books, or studies that will help you in supporting your topic. Write your own observation/s on the...
-
The unadjusted trial balance of World Enterprises for the year ending December 31, 2014, follows: Additional information: 1. There is $750 of supplies on hand on December 31, 2014. 2. The one-year...
-
What factors influence the shape of the upset joint in flash welding, as shown in Fig. 12.37b? Why?
-
In the 1970s, Special Electric Company brokered the sale of crocidolite asbestos, which is the most toxic form of asbestos, to Johns- Manville Corporation. Special Electric never held possession of...
-
Equipment replacement decisions and performance evaluation. Bob Moody manages the Knoxville plant of George Manufacturing. He has been approached by a representative of Darda Engineering regarding...
-
On January 1, 2024, the general ledger of Dynamite Fireworks includes the following account balances: Accounts Cash Debit $24,900 Credit Accounts Receivable 6,300 Supplies 4,200 Land 61,000 Accounts...
-
Describe some of the explicit and implicit costs of obtaining a college degree. If two baristas can produce 200 espresso drinks per shift and three baristas can produce 275 espresso drinks, what is...
-
The molecular orbitals for the allyl system (bases set = three conjugated p orbitals) are given by: 1: 1/2 1 + 1/2(2 2) + 1/2 p3. 3: 1/2 1 1/2(2 $2) + 1/2 63. 2: 1/2(2 01) - 1/2(2 $3); note that c2 =...
-
How is deviance the same in the physical world and digital online world? How it is different?
-
A company, which is debt-free and finances only with equity from retained earnings, is considering 7 equal-sized capital budgeting projects. Its CFO hired you to assist in deciding whether none,...
-
What is the output of the following C++ segment of code: for(; ;) { Cout < >x; If (x%2==0) continue; If (x %3==0) break; Cout <
-
In which phase of the emulsion is oleic acid found for the BP formula? Support your conclusion by referencing the relevant results. What role in the emulsion do oleic acid and dilute ammonia solution...
-
You are a new staff associate on an engagement team that is auditing one of your accounting firms biggest clients. You overhear your audit manager making lunch plans with the clients internal audit...
-
A copper wire (density = 8.96 g/cm 3 ) has a diameter of 0.25 mm. If a sample of this copper wire has a mass of 22 g, how long is the wire?
-
On February 1, Year 3, Harrier Ltd., a Canadian company, sold goods to a company in a foreign country and took a note receivable for FF6,200,000. The note matures on February 1, Year 5, and bears...
-
On January 1, Year 1, Porter Inc. purchased 85% of the voting shares of Sloan Ltd. for $3,026,000 in cash. On this date, Sloan had common shares outstanding in the amount of $2,200,000 and retained...
-
Explain if and when it may be appropriate for an accountant to prepare financial statements that are not in accordance with GAAP.
-
For the particular case of hard spheres, the pressure in the virial equation of state is determined by evaluating the pair correlation function at contact. Write the pair correlation function as...
-
Use a virial expansion approach to determine the first few nontrivial order contributions to the pair correlation function \(g(r)\) in \(d\) dimensions. Show that the pair correlation function is of...
-
(a) For a dilute gas, the pair correlation function \(g(r)\) may be approximated as \[g(r) \simeq \exp \{-u(r) / k T\}\] Show that, under this approximation, the virial equation of state (10.7.11)...
Study smarter with the SolutionInn App