Suppose you are given the following information A company has a net income of $500,000 per year The company has a required rate of return of 12 The company has a growth rate of 5 Calculate the present value of the company using the dividend discount model ...

The detailed answer for the above question is provided below The dividend discount model is used to ...

Suppose you are given the following information: A company has a net income of $500,000 per year.

Fantastic news! We've Found the answer you've been seeking!

Question:

Suppose you are given the following information:

A company has a net income of $500,000 per year.
The company has a required rate of return of 12%.
The company has a growth rate of 5%.

Calculate the present value of the company using the dividend discount model.

Related Book For answer-question

Macroeconomics

ISBN: 978-0138014919

12th edition

Authors: Robert J Gordon

See More Books

Posted Date: Mar 06, 2023 05:18 AM

See More Questions

Suppose that you are given the following information about two callable bonds that can be called immediately: You are told that both of these bonds have the same maturity and that the coupon rate of...
A company has accounting net income of S50 million and shareholders equity' of $350 million. Assume that carrying values for all assets and liabilities equal their fair value. Finally, assume the...
Suppose that you are given the following information about Australia, Switzerland, and the United States. The Australian dollar is expected to depreciate relative to the United States dollar. The...
With the company expanding into several new markets in the coming months, Cable & Moore was anticipating a large increase in sales revenue. The future looked bright for this provider of...
How might an organization use its culture to increase the probability of ethical behavior and decrease the probability of unethical behavior by its leaders and employees?
The International Space Station is in orbit around Earth at a distance r from the center of the Earth. A chunk of space debris hits the Earth by 12%. Did Earth's gravitational force on the Station...
With reference to the preceding exercise, find the corresponding distribution function and use it to determine the probabilities that a random variable having this distribution function will take on...
Niagra Falls Spoiling Goods Company, a wholesale supply company, engages independent sales agents to market the companys products throughout New York and Ontario. These agents currently receive a...
Westgaard Incorporated uses a job-order costing system and its total manufacturing overhead applied always equals its total manufacturing overhead. In March, the company completed job G87M that...
BOOTS, Inc., recently completed work on a 1 year, $10 million contract for technical support services awarded by the US Army. The contract included a small business subcontracting plan, and it also...
Your family invested in perpetuity (by paying a lump-sum) 50 years ago.The perpetuity pays $120,000 per year for infinity. What would be the current fair price for this perpetuity (that you can sell...
Find the total monthly payment, including taxes and insurance. Mortgage Interest Rate Term of Loan Annual Taxes Annual Insurance $79,500 4% 25 years $674 $228
A sun-like star is barely visible to naked-eye observers on earth when it is a distance of 7.0 light years, or 6.610 16 m, away. The sun emits a power of 3.810 26 W. Part A Using this information, at...
Social Media Marketing for Expansion A guest speaker at a small business development conference has a main audience of business owners who want to incorporate social media marketing into their...
sarah gets 1 5 k scholarship. 8 0 0 0 for tuition and books, 7 0 0 0 room and board. gets laid 7 5 0 0 weak for work. What is her gross income?
The surface gravity of mars is 3.7m/s squared. If a personwith a mass of 100kg were parachuting on Mars. What would be theforce exerted by air resistance at terminal velocity?
A factory costs $1,000,000 to build. You determine that it will produce cash for 10 years with an inflow of $230,000 a year for the first five years and an inflow of $170,000 a year for last five...
What is the purpose of the journal wizard?
Explain whether each of the following events would cause the nations currency to become overvalued or undervalued relative to its implied purchasing power parity value: (a) Russia becomes a leading...
Identify and describe the five main types of lags that affect the timeliness of monetary and fiscal policy.
According to the theory first presented in Chapter 3 and developed further in this chapter, the interest rate and investment are negatively related. Yet both business investment and interest rates...
Form a small group. Concentrate on BSE Sensex companies and compile the voluntary disclosures made by each of them. Draft a crisp research paper highlighting your findings and use thereof to various...
Billy Ray Nibert was convicted of capital murder in the Circuit Court, Hillsborough County and he appealed. The Supreme Court of Florida affirmed the conviction, vacated the death sentence and...
Hassan Abu-Jihaad was convicted of disclosing national defense information and of providing material support to terrorist by a jury in the District Court of Connecticut. Abu-Jihaad moved for a...

Suppose you are given the following information: A company has a net income of $500,000 per year.

Question:

Expert Answer:

The detailed answer for the above question is provided below The dividend discount model is used to ... View the full answer

Macroeconomics

Students also viewed these finance questions