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Author Question: Google has just declared a dividend of 2.12 on its common stock. Dividends are paid annually. ... (Read 79 times)

fnuegbu

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on: Jul 10, 2018
Google has just declared a dividend of 2.12 on its common stock. Dividends are paid annually. Dividends are expected to grow at the rapid pace of 10 for the next 4 years, after which growth is expected to slow to 3 per annum forever.
 
  During the rapid growth phase, the required return on this investment will be 20, and it is expected to drop to 12 when growth slows. What is the current market value of this stock?
  A) 19.73
  B) 23.98
  C) 25.33
  D) 29.43
  E) 74.70

Question 2

Premium Seed Sales, Inc expects to generate sales of 22,000,000 in the coming year. All sales are done on a
  credit basis, net 45 days.
 
  Premium Seed has estimated that it takes an average of three days for payments to
  reach their central office and an additional two days to process the payments. What is the opportunity cost of
  the funds tied up in the mail and processing? Premium Seed uses a 360-day year in all calculations and can
  invest free funds at 6.5.


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courtney_bruh

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

B

Answer to Question 2

Daily collections = 22,000,000/360 = 61,111
Opportunity cost = (61,111)5.(.


fnuegbu

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Reply 2 on: Jul 10, 2018
Great answer, keep it coming :)

robbielu01

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Reply 3 on: Yesterday
Wow, this really help

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