Author Question: A firm's most recent annual dividend was 2 per share; its shares sell for 40 in the stock market, ... (Read 73 times)

K@

  • Hero Member
  • *****
  • Posts: 608
A firm's most recent annual dividend was 2 per share; its shares sell for 40 in the stock market, and the company expects its dividend to grow at a constant rate of 5 in the foreseeable future.
 
  Using the dividend growth (Gordon) model, what would you estimate its equity cost of capital to be?

Question 2

What are the major risks facing multinational corporations?
 
  What will be an ideal response?



ndhahbi

  • Sr. Member
  • ****
  • Posts: 390
Answer to Question 1

10.25 = (2 )(1.05 )/(40 + .05 )

Answer to Question 2

Sudden and unexpected changes in exchange rates; capital controls; expropriation of property; ownership and human resource restrictions; lack of protection for intellectual property; non-enforcement of contracts and business laws; civil unrest and wars; corruption; discriminatory policies against foreign personnel and businesses (including red tape and special fees and other charges); and sudden changes in governments.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

There are more sensory neurons in the tongue than in any other part of the body.

Did you know?

For pediatric patients, intravenous fluids are the most commonly cited products involved in medication errors that are reported to the USP.

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?

After 5 years of being diagnosed with rheumatoid arthritis, one every three patients will no longer be able to work.

Did you know?

Throughout history, plants containing cardiac steroids have been used as heart drugs and as poisons (e.g., in arrows used in combat), emetics, and diuretics.

For a complete list of videos, visit our video library