Author Question: The effective annual rate for a continuously compounded 6.0 APR is about 6.184. Indicate whether ... (Read 109 times)

moongchi

  • Hero Member
  • *****
  • Posts: 516
The effective annual rate for a continuously compounded 6.0 APR is about 6.184.
 
  Indicate whether the statement is true or false.

Question 2

Natalie is interested in valuing the shares of Union Aerospace (UA). UA pays dividends annually. She expects the stock to pay dividends of 3 at the end of each of the next four years.
 
  Thereafter, she expects the dividend to grow at 7 per annum in perpetuity. If her required return is 12, then how much should she pay for a share?
  A) 43.63
  B) 45.54
  C) 47.24
  D) 49.91
  E) 73.31



TheDev123

  • Sr. Member
  • ****
  • Posts: 332
Answer to Question 1

Answer: TRUE
Explanation: EAR = e0.06 - 1 = 0.0618365 or 6.184

Answer to Question 2

D



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

There are more nerve cells in one human brain than there are stars in the Milky Way.

Did you know?

Bisphosphonates were first developed in the nineteenth century. They were first investigated for use in disorders of bone metabolism in the 1960s. They are now used clinically for the treatment of osteoporosis, Paget's disease, bone metastasis, multiple myeloma, and other conditions that feature bone fragility.

Did you know?

Chronic necrotizing aspergillosis has a slowly progressive process that, unlike invasive aspergillosis, does not spread to other organ systems or the blood vessels. It most often affects middle-aged and elderly individuals, spreading to surrounding tissue in the lungs. The disease often does not respond to conventionally successful treatments, and requires individualized therapies in order to keep it from becoming life-threatening.

Did you know?

In the United States, an estimated 50 million unnecessary antibiotics are prescribed for viral respiratory infections.

Did you know?

As of mid-2016, 18.2 million people were receiving advanced retroviral therapy (ART) worldwide. This represents between 43–50% of the 34–39.8 million people living with HIV.

For a complete list of videos, visit our video library