The carrying costs associated with credit extension

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Reference no: EM131986109

1. What is the 'opportunity' cost associated with credit extension. What are the 'carrying costs' associated with credit extension?

2. A7X Corp. just paid a dividend of $2.40 per share. The dividends are expected to grow at 16 percent for next eight years and then level off to growth rate of 6 percent indefinitely. If the required return is 15 percent, what is the price of the stock today?

3. This is a Growing perpetuity formula. The stock of a firm will pay a dividend of $4.4 a year from now. The dividend paid by the firm will increase at a rate 2% every year. The dividends are discounted at a rate of 8.90% every year. What is the price of the stock today?

Reference no: EM131986109

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