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Author Question: A. If a stock is expected to pay an annual dividend of 20 forever, what is the approximate present ... (Read 199 times)

LCritchfi

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on: Jul 1, 2018
a. If a stock is expected to pay an annual dividend of 20 forever, what is the approximate present value of the stock, given that the discount rate is 5?
 
  b. If a stock is expected to pay an annual dividend of 20 forever, what is the approximate present value of the stock, given that the discount rate is 8?
  c. If a stock is expected to pay an annual dividend of 20 this year, what is the approximate present value of the stock, given that the discount rate is 8 and dividends are expected to grow at a rate of 2 per year?

Question 2

The Normal-Form of a game is a description including
 
  A) the players.
  B) the strategies possible.
  C) the payoffs.
  D) All of the above


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Rilsmarie951

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Reply #1 on: Jul 1, 2018
Answer to Question 1

a. P = D/k = 20/.05 = 400
b. P = 20/.08 = 250
c. P = D1/(k - g) = 20/(.08 - .02 ) = 333.33

Answer to Question 2

D


LCritchfi

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Reply 2 on: Jul 1, 2018
YES! Correct, THANKS for helping me on my review

bdobbins

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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