Author Question: The co-insurance provision on homeowners' policies A) is meant to eliminate homeowners claims ... (Read 67 times)

Shelles · **on:** Jul 11, 2018

The co-insurance provision on homeowners' policies

A)

is meant to eliminate homeowners claims for small losses.
B)

means that the homeowner will receive less than 100 reimbursement on all losses.
C)

implies that more than one insurance company may be responsible for the losses.
D)

provides an incentive for homeowners to insure their homes for 100 of replacement cost.

Question 2

Johnson Signs Inc has been able to increase dividends at the rate of 2 per year since the company first started paying dividends in 1957.

Johnson has developed a new production technique and can sell their signs at a premium price for the next three years. This immediate revenue boost will allow Johnson to increase dividends at a rate of 12 per year next year, then 10 the following year, and 8 the next year. After that, they intend to revert to their previous slow but steady increase in annual dividends. If current dividends are 2.45 per share and Johnson investors require an annual rate of return of 11, WHAT IS THE CURRENT PRICE PER SHARE FOR THE COMPANY'S STOCK?

tuate · **Reply #1 on:** Jul 11, 2018

Answer to Question 1

D

Answer to Question 2

D0 = 2.45
D1 = 2.74, PV D1 = 2.47
D2 = 3.02 PV D2 = 2.45
D3 = 3.26 PV D3 = 2.38
D4 = 3.33
P3 = 36.95 PV P3 = 27.01
Current Price = 34.32