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Author Question: The Bradshaw Company's most recent dividend was 6.75. The historical dividend payment by the company ... (Read 88 times)

crobinson2013

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on: Jul 10, 2018
The Bradshaw Company's most recent dividend was 6.75. The historical dividend payment by the company shows a constant growth rate of 5 percent per year.
 
  What is the maximum you would be willing to pay for a share of its common stock if your required rate of return is 8 percent?

Question 2

Since the percentage-of-sales method assumes that all the form's costs and expenses are variable, it tends to understate profits when sales are increasing and overstate profits when sales are decreasing.
 
  Indicate whether the statement is true or false


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anoriega3

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Reply #1 on: Jul 10, 2018
Answer to Question 1

D1 = 6.75  (1 + 0.05 ) = 7.0875
P = D1 / (r - g) = 7.0875/(0.08 - 0.05 ) = 236.25

Answer to Question 2

TRUE


crobinson2013

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Reply 2 on: Jul 10, 2018
Thanks for the timely response, appreciate it

AmberC1996

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

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