question answer - Essay Example

Only on StudentShare

Extract of sample
question answer

The details mentioned in the data require that the long run rate of return must be calculated using the formula of present value of dividend using Dividend Discount Model. . PV GROWING PERPETUITY (DIVIDEND DISCOUNT MODEL) Data: Present Value of Share PV O USD.150 Dividend for the First Year D1 USD. 7 Growth g 0.04 Rate of return r ? FORMULA REARRANGED In the above provided case since the value of price was already provided, the formula for such payments has been manipulated and rate of return has been evaluated. The formula for DDM for the current price of shares is rearranged for the calculation of rate of the return. Applying this arrangement, the long term rate of return for the company is as follows: r 0.086667 r 8.67% Hence, the expected long run rate of return is 8.67%.This refers that when company is paying 60 percent of the earning as dividend to shareholders and investors are pricing the share at USD.150, the required rate of return in the long terms is 6.67%. This percentage assumes that price is based on incorporating all information about the company. The formula can be summarized as the ratio of the cash flows of dividends received in the future periods by the net difference of the discount rate and the growth rate. This formula is developed on the concept that current price of stocks are a series of payments which grows as dividend perpetually at a constant rate. . ...
Download paper

Summary

ELGAR GREEN, INC. PART A Elgar Green, Inc. is a business operating in the Burwood’s area. It converts the green waste into fertilizers. This business is not very profitable so the state is providing subsidy to the Burwood City Commission. The state requires Elgar Green to generate yield on equity of 12%…
Author : jacobsdee

Related Essays

Answer questions
The acquisition cost of seed or cuttings should also keep in mind. Planting of most fruit trees, for example, are expensive. Some species are harder to adjust than others. Farmers should consider in advance how long they should take care of trees. If they need additional skills and knowledge to grow a particular species should be training or demonstration will be organized. Seeds or plants of the species considered easy. If asexual reproduction is necessary, farmers should receive training on how to do it. The seeds of Gliricidia sepium and Sesbania spp. For example, could not be readily...
7 pages (1757 words) Coursework
integration question
While the basic fundamentals of marketing relating to the process of value creation, value communication, value distribution and value capture essentially remains the same, it can be increasingly said that the application of the processes has changed a lot. Various forms of marketing have emerged with the evolution of technology sponsored platforms, which enhances and multiplies the power of marketing. The secret to marketing still surround the process of retaining existing customers, while going for acquisition of new customers by creating as well as enhancing the demand for products and...
4 pages (1004 words) Assignment
Finance assignment question
This paper will take into account depository institutions whose main purpose is to provide financial services such as loans and deposits. Some of the constituents of depository institution are commercial banks, building societies, mortgage loans and credit unions, which all fall under one mainstream of financial institution. The depository institution came into existence when people felt there was need for security for their money. People faced the risks of loss of money through theft or accidents’ while keeping their money in their wallets or at home. Thus formed the initial goal of...
4 pages (1004 words) Assignment
Finance and Market , short essay question.
For the purpose of this study, we dwell on the advantages and disadvantages of the diversification of REITs holdings’ activities as opposed to the focused approach. Advantages Wider Market Cover When a REIT agency registers to venture into specific areas, there is an aspect of additional market cover. REIT can thus conduct a number of projects which essentially maximize its potential. This in the broader picture implies additional return on investment and maximizes the proportions of dividends that the shareholders gain in the REIT investment. This is not usually the practical case of REITs...
34 pages (8534 words) Essay
Finance and international tread question
These rules and understandings can include informal routines to formal standards for what makes up acceptable conduct and that are sometimes exemplified in an organization, sometimes not. c) Coordination is likely when it is concerned with sustaining an existing set of behaviours and policies (when it is concerned with sustaining a policy regime) than when it is focused on altering policies. d) Monetary, financial, and macroeconomic coordination is most likely in the scenario of extensive comity among countries. Conflict over other matters, whether economic or not, stifles efforts to agree...
4 pages (1004 words) Essay
ABC at Scotty Accents Company
This has been proven in the case of Scotty Accents where one costing system - absorption costing indicates that the production of Brass was not as profitable as Chrome while the other – activity based costing (ABC) indicates that it is the other way around. Therefore, different costing methods provide different results and can lead to different decisions being taken in terms of pricing and product mix. This problem is known as product-cost cross-subsidization where the over-costing of one product in Scotty Accents case leads to under-costing of the other product (Horngren et al 136). 2.0...
6 pages (1506 words) Case Study
Emerging Markets and Financial Regulation
There were major obstacles that Shiseido faced in its attempt to implement a globalization strategy. The first obstacle was the cultural differences present in the various countries and regions the company wished to enter, especially in Europe and the United States. These countries had very different cultural practices and preferences that were very different from the Japanese cultural practices and preferences and therefore there were very different cosmetic tastes and preferences in these countries. For instance, American consumers were interested in make-up products while Japanese consumers...
2 pages (502 words) Essay
Got a tricky question? Receive an answer from students like you! Try us!