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

Question

1 Approved Answer

Ambika traders paid a dividend of $4, $6, and $8 consecutively for three years to the shareholders. Its dividend is expected to increase at 8%

Ambika traders paid a dividend of $4, $6, and $8 consecutively for three years to the shareholders. Its dividend is expected to increase at 8% per annum from the 4th year onwards. Given the required rate of return at 12% per annum, calculate the present fair value of the stock.  

Step by Step Solution

★★★★★

3.37 Rating (153 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the present fair value of the stock we can use the Gordon Growth Model Dividend Discoun... 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_2

Step: 3

blur-text-image_3

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

International Financial Reporting a practical guide

International Financial Reporting a practical guide

Authors: Alan Melville

8th Edition

1292439424, 978-1292439426

More Books

Students also viewed these Accounting questions

Question

★★★★★
A bond just purchased pays annual interest of 10 percent. In seven years it matures at its face value of $25,000. What price was paid if current yields on a bond of this risk are 8.5 percent? 2. A...

Answered: 1 week ago

Question

★★★★★
1.Hope Corporation bonds bearing a coupon rate of 12%, pay coupons semiannually, have 3 years remaining to maturity, and are currently priced at $940 per bond. What is the yield to maturity? 2....

Answered: 1 week ago

Question

★★★★★
Modern portfolio theory (MPT) is a more recent approach for constructing portfolios. Describe some significant merits and drawbacks of this approach. Assess whether the MPT with the concept of...

Answered: 1 week ago

Question

★★★★★
Need assistance on adding accounting info to the excel worksheet posted. A.) would 97,400 go under cash or fixed assets ? Number Styles Cells Editing Ideas g Cash Balance B. C D E H. K M T. 0,1,F...

Answered: 1 week ago

Question

★★★★★
Which one of the following is not a factor in determining a company's unit sales and market share of entry-level or multi-featured cameras in a particular geographic region? a. The number of camera...

Answered: 1 week ago

Question

★★★★★
In Exercises 1318, find the average rate of change of the function from x 1 to x 2 . f(x) = x + 2x from x 3 to x = 5

Answered: 1 week ago

Question

★★★★★
=+Perform a process capability analysis on the fudge shop and comment on your findings

Answered: 1 week ago

Question

★★★★★
CPI sells computer peripherals. At December 31, 2011, CPIs inventory amounted to $500,000. During the first week in January 2012, the company made only one purchase and one sale. These transactions...

Answered: 1 week ago

Question

★★★★★
The amount of Social Security benefits received by an individual that he or she must include in gross income Depending upon the taxpayer's Social Security benefits and other income, it may be zero or...

Answered: 1 week ago

Question

★★★★★
Continuing Payroll Project: Prevosti Farms and Sugarhouse - EERF (Static) Prevosti Farms and Sugarhouse pays its employees according to their job classification. The following employees make up...

Answered: 1 week ago

Question

★★★★★
IRR of the project? Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line: Click on the icon in order to copy ts content into a spreadsheet Category To T: TS Investment -...

Answered: 1 week ago

Question

★★★★★
Rambo Company has three products, A, B, and C. The following information is available: Product A Product B Product C Sales $60,000 $90,000 $24,000 Variable costs 36,000 48,000 15,000 Contribution...

Answered: 1 week ago

Question

★★★★★
After reading aloud a certain fable to his fifth graders, mr osmet asks some students 'so who can you tell me the moral of this story> When the students don't respond immediately he tells them, "the...

Answered: 1 week ago

Question

★★★★★
The following table gives amount of annual spending of a country s defense budget in billions of dollars for military construction Let x 12 correspond to the year 2012 Sketch the graph of the...

Answered: 1 week ago

Question

★★★★★
Post an explanation of how identity, privilege, power, and oppression influence professional practice based on Janet Helms's explanation in the Microtraining Associates video. Then explain the...

Answered: 1 week ago

Question

★★★★★
VWX Inc., has sales of $500,000, net income of $80,000, dividend payout of 50%, total assets of $700,000 and target debt-equity ratio of 1.5. If the company grows at its sustainable growth rate in...

Answered: 1 week ago

Question

★★★★★
The real risk-free rate is 2.5%. Inflation is expected to be 1.5% this year and 4.75% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury...

Answered: 1 week ago

Question

★★★★★
On average there are four traffic accidents in a city during one hour of rush-hour traffic. Use the Poisson distribution to calculate the probability that in one such hour there arc (a) No accidents...

Answered: 1 week ago

Question

★★★★★
Hullman Ltd prepares financial statements to 31 March each year. Consider each of the following situations and determine in each case whether or not a provision should be recognised in the company's...

Answered: 1 week ago

Question

★★★★★
On 1 April 2023, Endale Ltd (which prepares accounts to 31 March each year) enters into a lease of computer equipment. The company is required to make six half-yearly lease payments of 7,674 each and...

Answered: 1 week ago

Question

★★★★★
The main aim of standard IFRS16 Leases is to ensure that a lessee's financial statements provide a faithful representation of the lessee's financial position. (a) Outline the way in which IFRS16...

Answered: 1 week ago

Question

★★★★★
The following sample observations were randomly selected. Determine the correlation coefficient and interpret the relationship between x andy.

Answered: 1 week ago

Question

★★★★★
A school supervisor is reviewing initial wages of former students (in $000). Samples were taken over 3 years for four different majors (accounting, administration, finance, and marketing). For each...

Answered: 1 week ago

Question

★★★★★
A Buffalo, New York, cola distributor is featuring a super-special sale on 12-packs. She wonders where in the grocery store to place the cola for maximum attention. Should it be near the front door...

Answered: 1 week ago

Previous Question Next Question