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The company's beta is 1.35, its dividend growth rate is 8.8%, just yesterday it paid a dividend of $1.75 , and today's shareprice is $34.00 . You believe that today's shareprice equals today's intrinsic value. Furthermore, you believe that the shareprice moves in accordance with the dividend constant growth model. The economy wide risk free interest rate is 4.5%, and the expected risk premium for the market portfolio is 9.5%. You believe that the stock represents a good investment if the expected total rate of return implied by the dividend constant growth model exceeds the required rate of return implied by the Capital Asset Pricing Model. Which of the following statements is most accurate?
a. The required return is 22.9% and the expected return is 11.1% so buy it
b. The required return is 19.9% and the expected return is 11.1% so buy it
c. The required return is 19.9% and the expected return is 14.4% so do not buy it
d. The required return is 17.3% and the expected return is 14.4% so do not buy it
e. The required return is 22.9% and the expected return is 14.4% so do not buy it
Assume that a firm buys a depreciable asset for $6 million and its salvage value is $0 after a depreciable life of 12 years. Using the SLN and DDB functions, determine the depreciation expense for each of the 12 years under the straight-line (SLN) an..
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Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. That is, what is the maxi..
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Suppose we have the following Treasury bill returns and inflation rates over an eight year period: Year Treasury Bills Inflation 1 9.87% 11.87% 2 10.76 15.36 3 8.48 9.69 4 7.78 7.43 5 8.30 9.69 6 10.63 12.15 7 13.49 16.34 8 15.31 16.22. Calculate the..
A contribution made to a not-for-profit healthcare organization that the donor specifies is to be used only for the provision of charity care would most likely be classified as 1) unrestricted 2)temporarily restricted 3)permanently restricted4) board..
Daniel Silva is 40 years old today. He is planning for his retirement in twenty-five years when he turns 65.For each of the next 25 years, he will be saving $15,000 in his retirement account; the amounts to be saved at the end of each year. How much ..
What is the average amount it will have in the fund over the course of two years? Find the one-month moving average of the amount it had in the fund.
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