Answer
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Explanation
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Answer:
P₀ = $59.45
Explanation:
the numbers are missing so I looked for a similar question:
- expected EPS = $2.775
- retain 0% of earnings (years 1 - 2)
- retain 48% of earnings (years 3 - 4)
- then retain 23%
- expected return on new projects = 22.4%
- Re = 10.7%
growth rate = retention rate x return on new projects
g₁ = not given EPS₁ = $2.775
g₂ = 1 x 22.4% = 22.4% EPS₂ = $3.3966
g₃ = 1 x 22.4% = 22.4% EPS₃ = $4.1574
g₄ = 0.48 x 22.4% = 10.752% EPS₄ = $4.6044
g₅ = 0.48 x 22.4% = 10.752% EPS₅ = $5.0995
g₆ = 0.23 x 22.4% = 5.152% EPS₆ = $5.3622
dividend payout ratio expected dividend
year 1 = 0 $0
year 2 = 0 $0
year 3 = 0.52 $2.1618
year 4 = 0.52 $2.3943
year 5 = 0.77 $3.9266
year 6 = 0.77 $4.1289
since the growth rate became constant at year 6, we can find the terminal value for year 5:
terminal value year 5 = $4.1289 / (10.7 - 5.152%) = $74.4214
P₀ = $0/1.07 + $0/1.07² + $2.1618/1.07³ + $2.3943/1.07⁴ + $3.9266/1.07⁵ + $74.4214/1.07⁵ = $0 + $0 + $1.7647 + $1.8266 + $2.7996 + $53.0614 = $59.45
Growth stage. Profits from the company should be able to comfortably cover overhead and pay employees at this point. Sales are probably rising, and profit margins have risen once capital investments and loans have been repaid by the business.
<h3>What these terms means?</h3><h3>A) Positive cash flow</h3><h3>B) Negative cash flow</h3><h3>C) Dividends</h3>
- The net amount of cash and cash equivalents coming into and going out of a business is referred to as cash flow.
- Money spent and money received represent inflows and outflows, respectively. Fundamentally, a company's capacity to produce positive cash flows, or more specifically, its capacity to maximize long-term free cash flow, determines its ability to create value for shareholders (FCF).
- When a company has positive cash flow, its net balance on its cash flow statement for that particular period is higher than zero. In other words, the net result of all cash inflows and outflows over this period is positive rather than negative, and as a result, the company's cash reserves are increasing.
- Because a capital expenditure involves money leaving your company, it has a negative value in comparison to income or revenue. Because they are being deducted from your balance sheet or show as a negative capital expenditure on cash flow statements, capital expenditures are negative.
- a sum of money that is regularly paid by a business to its shareholders out of its profits (typically once per year) (or reserves) is called Dividends.
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<span>Policy officers should try to de-escalate the situation to avoid violence whenever possible. Therefore, officers should avoid aggressive approaches or intimidation and should instead be non-confrontations. Physical force should be reserved as an absolute last resort.</span>
Market structure is determined by the number and relative size of the firms in an industry.
- Market structure describes how different industries are categorized and distinguished based on how fiercely and in what ways they compete with one another for customers' goods and services. There are four different kinds of market structures: monopolistic competition, oligopolistic markets, perfect competition, and monopolistic markets.
- In economics, market structure illustrates how businesses are categorized and distinguished according to the sorts of items they sell and how external circumstances and elements impact their operations. It is simpler to comprehend the peculiarities of various marketplaces when there is a clear market structure.
- The four types of economic market structures are oligopoly, monopoly, perfect competition, and monopolistic competition. The following characteristics explain why the categories are different: In oligopoly, there are few producers, many in perfect and monopolistic competition, and one in monopoly.
Thus the correct answer is Option D.
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