What would You Pay for a stock with this promised dividend pattern. The firm will not pay a dividend for 4 years. In year 5 it will pay $2, which will grow by 20% for the next 3 years. After that, the dividend will grow 12% per year. The appropriate discount rate is 17%. (show the next nine cash flows and the final price you would pay.) (+4 if correct, -5 if incorrect)
Read DetailsFind the Nominal and effective rates for: Your firm’s supplier offers credit terms of 3/5 net 30. (use a 360 day year) A. What is the Nominal Rate of this this offer? B. What is the Effective Rate of this offer? C. If your alternative is to borrow from a Check Cashing type firm that charges 29% interest, WHEN do you Pay your supplier?(Explain your logic).
Read DetailsYou are willing to pay $12,500 for an investment that promises to pay: Time Payment 1 2250 2 2250 3 4050 4 4750 5 XX 6 XX 7 XX 8 2250 The promised rate of return is 18%. What is the value of X? ( 3 points if correct, -5 if incorrect)
Read DetailsThe manager of the quality department for a tire manufacturing company wants to know the average tensile strength of rubber used in making a certain brand of radial tire. The population is normally distributed and the population standard deviation is known. She uses a Z test to test the null hypothesis that the mean tensile strength is 800 pounds per square inch. The calculated Z test statistic is a positive value that leads to a p-value of .045 for the test. If the significance level (a) is .05, the null hypothesis would be rejected.
Read Details