Business, 07.03.2020 05:59 loveagirl111puppy

The Goliath Inc. decides to pay the following dividends over the next three years: $2, $2.6, and $3.38. Thereafter, the company will maintain a constant 10% growth rate in dividends forever. The required return of Goliath’s stock is 15%. Suppose Victor has $1000 today. He decides to buy 10 shares of Goliath’s stock today and save the rest of his $1000 into the Whales Cargo bank, which provides an annual interest rate of 6%. Victor will sell his shares of Goliath’s stock in year 3 and withdraw the money from the bank as well. Victor wants to know how much money he can have in year 3, with such an investment plan.

What is the stock price of Goliath Inc. today?

How much money can Victor save in the bank today?

What is the stock price (per share) of Goliath Inc. when Victor sells it in year 3 (immediately after the third dividend is paid out)?

How much money can Victor withdraw from the bank in year 3?

With such an investment plan, how much money will Victor have in year 3? Suppose Victor consumes all his dividends over these years and his wealth consists of the capital gains from the stock and the money withdrawal from the bank.

Answers: 2

Show answers

Other questions on the subject: Business

Business, 22.06.2019 02:00, rsanchez1226

On january 1, 2017, fisher corporation purchased 40 percent (90,000 shares) of the common stock of bowden, inc. for $980,000 in cash and began to use the equity method for the investment. the price paid represented a $48,000 payment in excess of the book value of fisher's share of bowden's underlying net assets. fisher was willing to make this extra payment because of a recently developed patent held by bowden with a 15-year remaining life. all other assets were considered appropriately valued on bowden's books. bowden declares and pays a $90,000 cash dividend to its stockholders each year on september 15. bowden reported net income of $400,000 in 2017 and $348,000 in 2018. each income figure was earned evenly throughout its respective year. on july 1, 2018, fisher sold 10 percent (22,500 shares) of bowden's outstanding shares for $338,000 in cash. although it sold this interest, fisher maintained the ability to significantly influence bowden's decision-making process. prepare the journal entries for fisher for the years of 2017 and 2018. (if no entry is required for a transaction/event, select "no journal entry required" in the first account field. do not round intermediate calculations. round your final answers to the nearest whole dollar.)

Answers: 3

continue

Business, 22.06.2019 03:00, brarob340

Tina is applying for the position of a daycare assistant at a local childcare center. which document should tina send with a résumé to her potential employer? a. educational certificate b. work experience certificate c. cover letter d. follow-up letter

Answers: 1

continue

Business, 22.06.2019 12:20, mxrvin4977

In terms of precent, beer has more alcohol than whiskey true or false

Answers: 1

continue

Business, 22.06.2019 21:00, lathwkuster

Identify whether the statements are true or false by dragging and dropping the appropriate term into the bin provided. long-run economic growth is unlikely to be sustainable because of finite natural resources. in the modern economy, countries that possess few domestic natural resources essentially have no chance to develop economically. finding alternatives to natural resources will be very important to long-term economic growth. in the modern economy, human and physical capital are generally less important in productivity than natural resources. in the 19th century, countries with the highest per capita gdp were nearly always abundant in minerals and productive farming land.

Answers: 1

continue

You know the right answer?

The Goliath Inc. decides to pay the following dividends over the next three years: $2, $2.6, and $3....