FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A stock sells for $25. The next dividend will be $5 per share. If the rate of return earned on reinvested funds is a constant

A stock sells for $25. The next dividend will be $5 per share. If the rate of return earned on reinvested funds is a constant 10% and the company reinvests 30% of earnings in the firm, what must be the discount rate? (Enter your answer as a whole percent.)

Discount Rate

%


Step by Step Solution

There are 3 Steps involved in it

Step: 1

Heres how to calculate the discount rate Calculate the total expected return per share ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investments An Introduction

Investments An Introduction

Authors: Herbert B Mayo

9th Edition

324561385, 978-0324561388

More Books

Students also viewed these Accounting questions

Question

A FHA HECM reverse mortgage is only required to be repaid (1) when the borrower moves, or (2) when the borrower dies. Assume you take out a $300,000 reverse mortgage loan, under the FHA program, for...

Answered: 1 week ago

Question

Introduction and definition of CALD, disability, lower socio-economic groups and Rural, regional and remote populations (lower socio-economic groups and Rural, regional and remote populations doesnt...

Answered: 1 week ago

Question

★★★★★
A stock sells for $40. The next dividend will be $4 per share. If the rate of return earned on reinvested funds is 15 percent and the company reinvests 40 percent of earnings in the firm, what must...

Answered: 1 week ago

Question

★★★★★
Discuss documents that need to be included in recovery documentation?

Answered: 1 week ago

Question

★★★★★
What are the principal issues in managing hardware and software technology? a. Explain why managers need to pay attention to capacity planning and scalability of technology resources. b. Describe the...

Answered: 1 week ago

Question

★★★★★
Aaron Lynch Company has the following balances in selected accounts on December 31, 2014. Service Revenue ........$40,000 Insurance Expense...... 2,700 Supplies Expense ....... 2,450 All the accounts...

Answered: 1 week ago

Question

★★★★★
Identify causal comparative research studies and analyze them to determine the steps for conducting causal comparative research, focusing on the strategies used by the researchers to strengthen their...

Answered: 1 week ago

Question

★★★★★
De Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share. She borrows $4,000 from her broker to help pay for the purchase. The interest rate on the loan is 8%....

Answered: 1 week ago

Question

★★★★★
Complete the Adjusted Trial Balance as of December 31, 2016 using the given information. Enter accounts in order of assets, liabilities, common stock, dividends, revenues, and expenses. Assume all...

Answered: 1 week ago

Question

★★★★★
From the following T accounts of Barry?s Cleaning Service of Yarmouth,? (a) Record and foot the balances on the appropriate pages in the Workbook or on MyAccountingLab, (b) Prepare a trial balance in...

Answered: 1 week ago

Question

★★★★★
A Math study group consists of 6 people. The following scores represent their IQs: 92, 104, 104, 106, 108, and 110. a) A student is interested in examining how intelligent this group is. Are the data...

Answered: 1 week ago

Question

★★★★★
57 Question: Prime cost A service for a sports car requires 3 hours of a skilled mechanic's time followed by 1/2 hour of unskilled labour. Rates of pay are (a) Skilled: 9 per hour (b) Unskilled: 5...

Answered: 1 week ago

Question

★★★★★
QUESTION 1 The fundamental principles of community psychology include: a respect for diversity. an understanding of the difference between normalcy and pathology. an appreciation for statistical...

Answered: 1 week ago

Question

★★★★★
Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,000 shares of Pamrod's $20 par value common stock. Balance sheet data for...

Answered: 1 week ago

Question

★★★★★
When Grant attends company training, he tends to prefer taking notes and writing down the steps of the task. Grant's preferences during these training sessions best fit within which of the following...

Answered: 1 week ago

Question

★★★★★
The information below is a reproduction from the Alphabetic Index. Which of the following terms is a nonessential modifier that will not affect code assignment? Absence (of) (organ or part) (complete...

Answered: 1 week ago

Question

★★★★★
Question text Compute and Interpret Liquidity, Solvency and Coverage Ratios Selected balance sheet and income statement information for Calpine Corporation for 2004 and 2006 follows. ($ millions)...

Answered: 1 week ago

Question

★★★★★
Differentiate the following terms/concepts: a. Personality types and money attitudes b. Planners and avoiders c. Moderating and adapting to biases d. "Perfectible judges" and "incorrigible judges"

Answered: 1 week ago

Question

★★★★★
a) A stock costs $900 and pays an annual $40 cash dividend. If you expect to sell the stock for $1,000 after five years, what is your anticipated return on the investment? b) A $1,000 bond has a 4...

Answered: 1 week ago

Question

★★★★★
Why may averaging percentage changes produce an inaccurate measure of the true rate of return?

Answered: 1 week ago

Question

★★★★★
You buy 100 shares in a no-load mutual fund at its net asset value of $10. During the year, the mutual fund distributes $0.75 in dividends. You redeem the shares for their net asset value of $12.03,...

Answered: 1 week ago

Question

★★★★★
Mattson Loan Company completed these transactions: 2016 Apr. 1 Loaned $20,000 to Charlene Baker on a one-year, 5% note. Dec. 31 Accrued interest revenue on the Baker note. 2017 Apr. 1 Collected the...

Answered: 1 week ago

Question

★★★★★
Assume Loblaw Companies Limited reported these figures in millions of dollars: __________________________________________________________________2017 ________2016 Net...

Answered: 1 week ago

Question

★★★★★
Assume Black Corporation reported the following items at year-ends 2017 and 2016. Requirements 1. Compute Black's (a) acid-test ratio and (b) days' sales in average receivables for 2017. Evaluate...

Answered: 1 week ago

Previous Question Next Question