Plastic Pretzels stock recently paid a dividend of $1.31 per share. The dividend growth rate is expected to be 6.00% indefinitely. Stockholders require a return of 12.80% on this stock. What is the current intrinsic value of Plastic Pretzels stock? What would you expect the price of this stock to be in one year if its current price is equal to its intrinsic value If you were to buy Plastic Pretzels stock now and sell it after receiving the dividend one year from now, what would be your holding period return (HPR)? If you are able to purchase the stock for $17.70 instead of its intrinsic value today, what would be the holding period return?

Answers

Answer 1

The current intrinsic value of the stock is $16.62 per share.

If the current price of the stock is equal to its intrinsic value, we would expect the price of the stock to be $17.70.

If we buy the stock now for $16.62 and sell it after receiving the dividend one year from now at a price of $17.70, our HPR would be 0.1414 or 14.14%.

If we are able to purchase the stock for $17.70 instead of its intrinsic value, our HPR would be 0.0785 or 7.85%.

To calculate the intrinsic value of Plastic Pretzels stock, we can use the dividend discount model (DDM), which is based on the present value of expected future dividends.

According to the problem, the current dividend is $1.31, and the dividend growth rate is 6.00%. Therefore, the next year's dividend is expected to be $1.39 (1.31 x 1.06).

To calculate the intrinsic value of the stock, we can use the following formula:

Intrinsic value = (Next year's dividend / (Required return - Dividend growth rate))

Plugging in the given values, we get:

Intrinsic value = (1.39 / (0.128 - 0.06)) = $16.62

This means that the current intrinsic value of the stock is $16.62 per share.

If the current price of the stock is equal to its intrinsic value, we would expect the price of the stock to be $17.70 (current intrinsic value + next year's dividend of $1.39).

To calculate the holding period return (HPR) if we were to buy the stock now and sell it after receiving the dividend one year from now, we can use the following formula:

HPR = (Dividend + (Sale price - Purchase price)) / Purchase price

If we buy the stock now for $16.62 and sell it after receiving the dividend one year from now at a price of $17.70, our HPR would be:

HPR = (1.39 + (17.70 - 16.62)) / 16.62 = 0.1414 or 14.14%

If we are able to purchase the stock for $17.70 instead of its intrinsic value of $16.62, our HPR would be:

HPR = (1.39 + (17.70 - 17.70)) / 17.70 = 0.0785 or 7.85%

In this case, our HPR would be lower because we are paying more for the stock than its intrinsic value. Therefore, it is important to analyze a stock's intrinsic value before making an investment decision.

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Related Questions

You work about 50% of the time at client sites and the other 50% of the time at your company's offices. Which mobile device accessory would help you most with your work

Answers

The mobile device accessory which would help most is a docking station for laptop.

What is a docking station?A laptop's base station, or docking station, converts the device into a desktop computer. The keyboard, mouse, monitor, and printer are permanently plugged into the docking station rather than being added to a laptop to make it desktop-ready. The laptop clamps into the docking station via USB or a single special-purpose connector to convert from portable to desktop use. Although the ordinary user's processing needs can be met by modern laptops, there will always be a tradeoff between port accessibility and mobility.

You may convert your laptop into a desktop computer with a docking station. Your laptop can connect to a docking station in order to use a monitor, printer, keyboard, mouse, storage device, backup drive, and even a local area network (LAN).

Therefore, The mobile device accessory which would help most is a docking station for laptop.

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In the short run, the individual competitive firm's supply curve is that segment of the:___________ a) marginal revenue curve lying below the demand curve. b) marginal cost curve lying above the average variable cost curve. c) marginal cost curve lying between the average total cost and average variable cost curves. d) average variable cost curve lying below the marginal cost curve.

Answers

In the short run, the individual competitive firm's supply curve is that segment of the: "marginal cost curve lying above the average variable cost curve."

What is the short run supply curve?

The short run supply curve of a business is the section of its marginal cost curve that is higher than its average variable cost curve.

According to the law of supply, when the market price rises, the company will supply more of its product.

A perfectly competitive business maximizes profit by generating the amount of production that equals the product's price and marginal cost.

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The purchase of the economy's expanding goods and services by households, businesses, and the government is known as the

Answers

The purchase of the economy's expanding goods and services by households, businesses, and the government is known as the factor.

Economic efficiency means an economic state in which all resources are optimally allocated to best serve each individual or entity while minimizing waste and inefficiency. If the economy is economically efficient, changes made to help one company will harm another.

A compound economy means that producing one good reduces the cost of producing another related good. Economies of scope occur when it is less expensive for a firm to produce more types of goods or services together than it is to produce fewer types of goods or each good individually.

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Which concept should be included when a new product or project begins its development cycle?

Answers

The concept that should be included at the beginning of a new product's development cycle is B. Idea generalization.

What is idea generalization?

This is the first step in the process of coming up with a new product or project.

At this step, the innovator comes up with the various functions and goals that the product or project should accomplish. These will fuel the ideas surrounding how the product would work.

Options for this question include:

A. Product definition

B. Idea generalization

C. initial design

D. Commercialization

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In the airline industry, the ______________ of offering international routes restricts movement between hub-and-spoke and point-to-point airlines.

Answers

In the airline industry, the exit barrier of offering international routes restricts movement between hub-and-spoke and point-to-point airlines.

What is the exit barrier?

This is the term that is used to describe all of the challenges and the impending difficulties that may prevent a company from exiting a market.

This question tells us that it is a barrier of exit and restriction of movement between hub-and-spoke and point-to-point airlines.

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Operating activities are most closely related to?

Answers

Answer: current assets and current liabilities.

Explanation:

if this helps it would help me a lot if you would give me a like

Setting up automatic account transfers is the easiest way to build your savings for your emergency fund or large purchases.

a. True
b. False

Answers

The statement, setting up automatic account transfers is the easiest way to build your savings for your emergency fund or large purchases, is true.

Automatic account transfers is the easiest process which lets your savings grow unattended. If you schedule the transfer around the time that your earnings arrive, the money for savings never really mixes with your spending funds.

Over time, you may also get used to living on that smaller amount too, making it easier to let your savings build. Thus, this saves your money for emergency fund or large purchases.

Hence, setting up automatic account transfers is the easiest way to build your savings for your emergency fund or large purchases.

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1. If a pregnant woman insists on continuing working in a job you, as manager, feel is too dangerous for her - can you change her position?

Answers

No, an employer can not single out pregnancy-related conditions to alter work positions or to determine an employee's ability to work.

It's miles illegal for an organization to discharge or push aside a pregnant worker for the duration of or as a result of absence because of pregnancy, delivery, or any submit-natal contamination, or to present observe of discharge or dismissal, or to differ to her drawback any of the situations of her provider.

The American College of Obstetricians and Gynecologists makes the subsequent recommendations: working at some point of being pregnant is typically safe. For those in excessive-risk occupations or with medically complex pregnancies, working hotels regularly can allow for persistent secure employment.

Employers can area pregnant personnel but only when it's miles the ideal course of action on occasions, in which the alleged misconduct or poor performance is unrelated to their pregnancy.

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One of the disadvantages of investing in real estate is A) investors need expert help. B) pyramiding. C) equity buildup. D) leverage.

Answers

There are many disadvantages of investing in real estate and one of it is A) Investors need expert help.

What is Real estate?

The investment in property is known as real estate investment. There are many investors who invests in such assets, and earn rentals and capital gains.

The investment in real estate needs expert advice as the person who is the advisor should have the market information so that the perfect price can be quoted in order to purchase or sell an asset.

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a) A person has 5 trousers, 7 shirts, 6 ties, and 3 pairs of shoes. In how many possible distinct ways can the person dress

Answers

The person can dress in 630 different ways according to permutation and combination.

What is permutation and combination?Subsets of a set can be created in two separate ways: combination and permutation. The subset's components can be listed in any order when combined. The components of the subset are listed in a permutation in a certain order.There are only a finite number of permutations and combinations for each data set. They can therefore be used to calculate the probability of complex events. The number of possible permutations increases and the likelihood that a particular permutation will occur decreases as a set's elements increase.

First, The person has to decide on pants. So, he has 5 choices. And for each pant, the person has 7 shirts, 6 ties and 3 pair of shoes as choice. So,  5*7*6*3 = 630.

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If people lose faith in the safety and security of financial institutions, what will happen to the u. S. Economy?

Answers

The standard of living will fall down.

The Financial institutions that engage in activities such as investing, currency exchange, and money deposits. Commercial banks, investment banks, brokerage businesses, insurance companies, and asset management funds are common examples.

Americans had faith in the banks and the economy, which appeared to be stable. It would be hard for enterprises to acquire financing if consumers lost trust in the safety of financial institutions . As a result, capital investment would stall, unemployment would rise, output of goods and services would fall, and the overall quality of life would deteriorate.

Therefore, the answer is fall in standard of living.

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What term describes the ratio of change in a price and its effect on the quantity of the product demanded?

Answers

The Price elasticity of demand is the term that describes the ratio of change in a price and its effect on the quantity of the product demanded.

What is a Price elasticity of demand?

This refers to the percentage change in the quantity demanded that is divided by the percentage change in price.

Normally, when the demand is elastic, this means that the quantity demanded changes by a relatively larger amount than the price change. So, if the consumers are sensitive to price changes, the demand is then elastic, if they are unresponsive, then demand is inelastic

Hence, Price elasticity of demand is the term that describes the ratio of change in a price and its effect on the quantity of the product demanded.

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Tableau is used to create dynamic and interactive visualizations. Dynamic visualizations can change over time. What does it mean for a visualization to be interactive?

Answers

Visualization to be interactive mean that the audience can control what data they see. The graphic display of information and data is known as data visualization. A good visualization highlights the important information while minimizing the noise in the data.

Data visualization tools make it simple to identify and analyze the trends, outliers, and the patterns in data by utilizing visual elements such as charts, graphs, and maps.  Another sort of visual art that captures our attention and keeps it fixed on the message is data visualization. Audience can immediately see trends and outliers when we look at a chart.

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Regulatory policy to affect what is happening in credit markets in the aggregate is referred to as?

Answers

Regulatory policy to affect what is happening in credit markets in the aggregate is referred to as monetary policy.

What is Monetary policy

Monetary policy are actions or rules that guides money in a particular country.

The policy affect how money is supplied and the country economic growth. Monetary policy are guides in determining and controlling a nation interest rate that are payable on loans that are collected.

Therefore, regulatory policy to affect what is happening in credit markets in the aggregate is referred to as monetary policy.

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Which of the following facts would NOT necessarily be taken into consideration when trying to determine which of two residences is the principal residence of the taxpayer?

Answers

The proximity of each residence to the taxpayer's close friends would not necessarily be taken into consideration when trying to determine which of two residences is the principal residence of the taxpayer.

What is meant by a Taxpayer?A taxpayer is anyone who owes taxes to the federal, state, or municipal governments, whether they are an individual or a corporation. Governments primarily obtain their funding through taxes, which are levied on both citizens and companies. Individual taxpayers in the US are often required to submit and pay both federal and state tax returns each year. Localized taxes like sales taxes and property taxes are implemented and enforced by state and municipal revenue agencies. Since failing to pay required taxes can result in penalties or additional legal actions, both people and corporations need to be aware of their tax duties.

Businesses must also file annual returns but usually plan for and pay regular estimated tax payments throughout the year.

Therefore, the proximity of each residence to the taxpayer's close friends is not taken into consideration.

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Who are the main stakeholders that the y is attempting to reach with the information it has gained through its market research?

Answers

The main stakeholders that the Y is attempting to reach with the information it has gained through its market research are the Primary stakeholders and the Secondary stakeholders.

There are three types of market research- Descriptive, Exploratory, and Causal. Y has conducted causal market research wherein the effect of change on the current operations is quantified.

Here, in this causal market research, Y is attempting to reach the Primary stakeholders and the Secondary stakeholders with the information it has gained through its market research.

Primary stakeholders are those individuals, groups or entities who are involved with the monetary transactions of an organization. Primary stakeholders include- employees, customers, investors, banks, lenders etc.

Secondary Stakeholders are the stakeholder who are not directly involved in a company, thus, they have indirect influence over the company. Secondary stakeholders include- competitors, government, trade unions, community etc. These groups do not have any financial interest in the company.

Hence, the answer is given and explained above.

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The Comparative Market Analysis (CMA) is a tool for licensees; which statement below is correct about the CMA

Answers

Option D is correct.  A CMA is not an appraisal and should not be advertised as one.

What is a comparative market analysis?

This is the term that is used to refer to the market analysis that may

be done by the real estate agents.

The goal is to analyze and find out the existing prices in the market by the available listings and previous listings of properties. The reason why the real estate agencies carry out the CMA is to determine the right prices for home sellers to sell their homes.

On the other hand, the purpose is to enable the buyers of these homes to buy the properties at the best possible prices.

Complete question

The Comparative Market Analysis (CMA) is a tool for licensees; which statement below is correct about the CMA?

A) The CMA is the same as an appraisal

B) A CMA is an estimate of value and an appraisal is exact value

C) A CMA and an appraisal must both conform to USPAP standards

D) A CMA is not an appraisal - and should not be advertised as one

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Like other corporations, market sales corporation can extend its operations through:_______
a. a winding up.
b. a termination.
c. a dissolution.
d. a merger.

Answers

Like other corporations, market sales corporation can extend its operations through D. a merger.

What is a corporation?

It should be noted that a corporation is an organization usually a group of people or a company that is authorized by the state to act as a single entity and recognized as such in law for certain purposes.

The advantages of a corporation include personal liability protection, business security and continuity, and easier access to capital and the disadvantages of a corporation include it being time-consuming and subject to double taxation.

Here, like other corporations, market sales corporation can extend its operations through a merger. This will lead to more sales and revenue.

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By integrating new transportation technologies into its fulfillment networks, package delivery companies such as DSL are _______.

Answers

By integrating new transportation technologies into its fulfillment networks, package delivery companies such as DSL are developing a more sustainable supply chain.

This is the correct answer because any logistics company would like to improve its service quality by reducing the transport time and at the same time being sensitive towards the environment by reducing the use of fossil fuels like Diesel and Petrol.

E-hailing rides, car sharing systems, electric vehicles (EVs), electric scooters, drones and even autonomous buses are already here. Drone delivery is one of the next advances aimed at reducing congestion and pollution on delivery trucks while maintaining the convenience of courier delivery.

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Which question applies predictive thinking to a public policy solution?
A-What incentives might government offer to encourage compliance with the policy
B-What criteria should be used to judge the efficacy of the solution implemented?
C-Which policy idea has the best chance at meeting all identified criteria?
D-Which organizations and individuals can best help identify policy solutions?

Answers

The question that applies predictive thinking to a public policy solution is option A. What incentives might government offer to encourage compliance with the policy?

What is public policy solution?

Public policy is an institutionalized proposal to solve relevant and real-world problems, guided by a conception and implemented by programs as a course of action created and/or enacted, typically by a government or nonprofit organisation, in response to social issues.

Therefore, the correct answer is option A. What incentives might government offer to encourage compliance with the policy?

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Answer:

The answer is C

Explanation:

Which policy idea has the best chance at meeting all identified criteria?

Which of the following mortgage-backed securities would provide investors with the most predictable maturity date

Answers

A.PACs are planned amortization class CMOS and have established maturity dates. Prepayment risk is transferred to the PAC companion, or support, class bonds.

PACs (photo archiving and communication device) is a medical imaging technology used commonly in healthcare companies to securely shop and digitally transmit digital images and clinically-applicable reports.

A picture archiving and communication system is a medical imaging generation that gives reasonably-priced garage and handy access to images from multiple modalities.

PACs % consists of 4 foremost additives: photo acquisition gadgets (imaging modalities), communication networks, percent archive and server, and integrated show workstations (WS).PACs can be further connected to RIS and HIS health care structures through Pac's verbal exchange networks.

Which of the following mortgage-backed securities would provide investors with the most predictable maturity date:

A) PACs

B) Ginnie Maes

C) TACs

D) Fannie Maes

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Which of the following mortgage-backed securities would provide investors with the most predictable maturity date: PACs

Securities are fungible and tradable financial instruments used to raise capital in public and private markets. Securities exist in the form of notes, stocks, treasury stocks, bonds, certificates of interest or participation in profit-sharing agreements, etc.

The types of security are debt, equity, derivative, and hybrid securities. Securities are very much important because they provide companies a chance to raise capital.

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The type of performance appraisal that judges specific, observable aspects of performance like being on time for work is a(n) ______ appraisal.

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The type of performance appraisal that judges specific, observable aspects of performance like being on time for work is a behavioral  appraisal.

What is behavioral  appraisal ?

Behavioral appraisal  is usually focus on specific actions that are related to the job it usually define desired parameters of the action s in the job .

In this case, The type of performance appraisal that judges specific, observable aspects of performance like being on time for work is a behavioral  appraisal.

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Curtis williams is 69 years old. His wife, mary williams, is 67 years old. Curtis and mary plan to file a joint return. Mary is legally blind. What is curtis and mary’s standard deduction?

Answers

Curtis Williams is 69 years old. His wife, Mary Williams, is 67 years old. Curtis and Mary plan to file a joint return. Mary is legally blind. IRS provides high standard deduction to married couples who have age of 65 or above and blind or one of the partner is legally blind.

IRS states that if filling for joint return is done by married taxpayers in the year 2022 then normal standard deduction is $25,900. In this case Curtis and Mary both are over the age of 65 and Mary is blind too then as per IRS guidelines they will get $1,400 deduction per person for being above 65 plus Mary will get additional $1,400 deduction for being legally blind.

$25,900 + $1,400 + $1,400 + $1,400 = $30,100

Hence, Curtis and Mary's standard deduction is $30,100.

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Abel enters into a contract with baker to sell 10,000 widgets at 2.00 per unit because of:________

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Abiel enters into a contract with Baker to sell 10,000 widgets at $2.00 per unit. Because of a typographical error, the printed contract stated that the price would be $20.00 per unit rather than $2.00 per unit.

A typographical error, often known as a misprint, occurs when written content is typed incorrectly. In the past, the term was used to describe typographical errors made by hand.

A scrivener's error is another term for a typographical error in a legal document. However, the term that is frequently used is "typo mistake." In essence, it is a typographical or spelling error made as a document is being finalized. Courts may offer rectification as a remedy to correct mistakes in written documents. Correction is usually only possible when there was a prior understanding between the parties and the written document failed to adequately reflect that understanding.

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If at the end of the fiscal year, the variances from standard are significant, the variances should be transferred to the a.work in process, cost of goods sold, and finished goods accounts b.work in process account c.finished goods account d.cost of goods sold account

Answers

If,at the end of the fiscal year, the conflicts from the standard are significant the disagreements should be transferred to the work in process account.

Variance In Fiscal Year

The fiscal year variant includes the number of assigning periods in the fiscal year and the number of unique periods. One can wait year in the Controlling component (CO).

Work In Process Account

Work in progress analysis involves following the amount of WIP in commodities at the end of an accounting span and allocating a cost to it for inventory valuation objectives, based on the percentage of consummation of the WIP items.

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Below is the simple process model. What development activity would you choose to add first to this process and why?

Answers

In the given Simple Model, I would like to add Requirements Gathering and Analysis after the Problem Statement. Because we know the problem description and we need to derive the requirements using the given data.

What exactly does "process modeling" mean?

Business processes or workflows are represented graphically in process modeling. Similar to a flow chart, each stage of the process is broken down so that a complete picture of the tasks involved in it within the context of the business environment is available.

A process model enables business processes to be visualized, helping firms better understand their internal business processes and manage and improve them. This is typically a flexible exercise for ongoing development.

What advantages does process modeling have?

Business processes are given a visual representation through the process modeling method, making it easier for users to analyze them and determine how they might be improved. Process modeling also has additional advantages, such as:

Increased effectivenessGain transparencyEnsure best practicesDevelop comprehensionBusiness orchestration.

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Requesting objects, rejecting interactions, sharing ideas, and seeking social interaction are examples of?

Answers

Requesting objects, rejecting interactions, sharing ideas, and seeking social interaction are examples of option B. communicative function. Communicative functions refer to the purpose of gestural, vocal, and verbal acts intended to convey information to others. Some communicative functions include commenting, requesting, protesting, directing attention, showing, and rejecting.

What is communication?

Communication is an apparent answer to the painful divisions between self and other, private and public, and inner thought and outer world.

Therefore, the correct answer is as given above

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The complete question goes thus:

Requesting objects, rejecting interactions, sharing ideas, and seeking social interaction are examples of;

A. communication.

B. communicative function.

C. expressive language.

D. language.

A charge for the use of money, usually figured as a percentage of the principal is called?

Answers

A charge for the use of money, usually figured as a percentage of the principal is called interest.

Simple interest is a very  easy  and quick method for calculating the interest charge on a loan.

Simple interest is calculated by multiplying the daily interest rate with the principal by the number of days that elapse between payments.

This type of interest is generally applied to automobile loans or short-term loans where the loans are for less than 12 months time period, whereas some mortgages also use this calculation method.

Simple interest benefits all the consumers who pay their loans on time or early each month because with this no additional amount gets added.

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What strategy is american tile corp. using when it acquires a company that makes industrial cleaning products that american tile does not currently offer?

Answers

Diversification strategy is American tile corp. using when it acquires a company that makes industrial cleaning products that American tile does not currently offer.

When businesses want to expand, they use a diversification approach. In order to boost revenues, it is a practice to add a new product to your supply chain. These goods may represent a new subset of the market that your organization already serves, a strategy known as business-level diversification.

One of the four growth techniques popularized by Igor Ansoff is diversification. One of these growth techniques is more likely to work for your firm than the others, depending on the sector, size, and ambition of your business. As follows:

Product Development

Penetration

Market Diversification and

Development

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Using simplified percentage complete amounts for a one-year project with weekly reporting and an average task or work packet size of one week, you can expect about a(n) ____ percent error rate.

Answers

Using simplified percentage complete amounts for a one-year project with weekly reporting and an average task or work packet size of one week, you can expect about a(n) 1 percent error rate.

What is a Simple Percent?

Simple percentages are percentages of amounts that can be found with a simple division or multiplication.

What is Percent Error ?

Percent errors indicate how big our errors are when we measure something in an analysis process. Smaller percent errors indicate that we are close to the accepted or original value.

For example, a 1% error indicates that we got very close to the accepted value, while 48% means that we were quite a long way off from the true value.

Percent error is the difference between estimated value and the actual value in comparison to the actual value and is expressed as a percentage. In other words, the percent error is the relative error multiplied by 100.

Percent Error Formula

The formula for percent error is:

PE = (|Estimated value-Actual value|/ Actual value) × 100

Your question is incomplete, but most probably your full question was:

Using simplified percentage complete amounts for a one-year project with weekly reporting and an average task or work packet size of one week, you can expect about a(n) ____ percent error rate.

a.1

b.5

c.11

d.15

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