Ackert company's last dividend was $1.55. the dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. the firm's required return (rs) is 12.0%. what is the best estimate of the current stock price?

$37.05

Explanation:

Data provided in the question:

last dividend, D0 = $1.55

Dividend growth rate, g = 1.5% = 0.015

growth rate after 2 year = 8.0% = 0.08

Required rate of return , r= 12% = 0.12

Now,

Year 1 dividend =  $1.55 × ( 1 + 0.015 ) = $1.57325

Year 2 dividend = $1.57325 × ( 1 + 0.015 ) = $1.5968

Stock price after year 2 = [ $1.5968 × ( 1 + 0.08) ] ÷ (0.12 - 0.08)

= $43.11

Therefore,

The current stock price = amounts discounted back to the present at the required rate of return

= ( $1.57325 ÷ 1.12 ) + ( 1.5968 ÷ 1.12² ) + ( $43.11 ÷ 1.12² )

= $37.05

answer; (10%) commission;

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.