Shares of ABBO stock are currently selling for $14.43 a share. The last annual dividend paid was $1.61 a share, and dividends increase at a constant rate. If the market rate of return is 14 percent, what is the dividend growth rate

Answers

Answer 1
Answer:

Answer:

The dividend growth rate is  3%

Explanation:

Given that:

  • Dividend : $1.61 (D)
  • Price:  $14.43 (P)
  • Market rate of return: 14% = 0.14 (r)

As we know that, the formula to find the price of a stock is:

  • P = D / (r - g)

In this question, we have:

14.43 = 1.61 / (0.14 -g)

<=> 0.14 - g = 1.61 / 14.43

<=> g = 0.14 - 0.11

<=> g = 0.03 = 3%

So the dividend growth rate is  3%

Answer 2
Answer:

Answer:

Growth rate  = 2.56%

Explanation:

Using the divided growth model

P = D× (1+g)/(ke-g)

P- price of stock, g- annual growth rate, Do- last dividend paid, Ke- market return

Substituting, we have

14.43 = 1.61(1+g)/(0.14-g)

cross multiplying

=14.43× (0.14-g) = 1.61 + 1.61g

2.0202- 14.43g = 1.61 + 1.61g

2.0202 -1.61 = 1.61g + 14.43g

0.4102 =16.04g

g = 0.025573566 × 100

Growth rate  = 2.56%


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Therefore, Option (a) is correct.

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Answer: Agree

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Answers

The coffee shop's practice of counting its inventory of bags of whole bean coffee every Wednesday morning is an example of a periodic inventory tracking system.

In a periodic inventory system, the inventory is not continuously updated in real-time. Instead, physical counts are conducted periodically, typically at regular intervals, to determine the quantity of inventory on hand.

In this case, the coffee shop chooses to conduct inventory counts on a specific day (Wednesday morning) to track the number of bags of whole bean coffee available.

By doing so, they can assess their stock levels, identify any discrepancies or shortages, and make informed decisions about restocking and managing their inventory.

Compared to perpetual inventory systems where inventory levels are continuously monitored using technology like barcode scanning, periodic inventory systems require physical counts and rely on manual record-keeping.

While periodic systems may be less precise and may not provide real-time information, they can still be effective for businesses with manageable inventory levels and where the cost of implementing a perpetual system may not be justified.

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Explanation:

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Contractionary policies refer to the policies used by the Central government to fight inflation and reduce government spending in the economy. These policies raise interest rate in the economy in order to make lending more expensive and as a result decrease economic growth of the nation.

Expansionary policies are intended to ENCOURAGE / INCREASE economic growth, and contractionary policies are intended to REDUCE economic growth.

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Contractionary policies decrease the total money supply. It is used in raising interest rates in order to combat inflation.



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