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NEW QUESTION: 1
Assume the following information about the common stock of a mid-sized regional bank.
Required rate of return on equity: 13.75% per year
Expected growth rate: 10.20% per year
Dividend at t0: $0.35
Assuming that the growth rate will remain stable, what is the value of this regional bank's common stock?
A. $10.86
B. None of these answers is correct.
C. $15.23
D. $10.02
E. $13.93
F. The answer cannot be calculated from the information provided.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
In this example, the growth rate of dividends is assumed to remain stable, allowing the use of the Gordon Model. The Gordon Model is also known as the "constant growth dividend discount model" and takes the following form:
P0 = [D1 / (r - g)]
Where
P0 = the price of common stock X at time 0
D1 = the expected dividend at t1
r = the required rate of return on equity investments and g = the expected growth rate of dividends.
Since the dividend at t1 is not provided, we must calculate it manually by multiplying the dividend at t0 by (1 + g). This will produce an answer of $0.3857 at t1.
Now that the dividend at t1 has been determined, the given information can be put into the equation provided, leading to the following series of calculations:
P0 = [$0.3857 / (.1375 - .1020)] = $10.86.
When using the Gordon model, remember that the required rate of return "r" must be greater than the expected growth rate "g." Otherwise, the equation will produce a nonsensical answer.

NEW QUESTION: 2

A. Option E
B. Option B
C. Option D
D. Option A
E. Option C
Answer: E

NEW QUESTION: 3
The implementations group has been using the test bed to do a 'proof-of-concept' that requires both Client 1 and Client 2 to access the WEB Server at 209.65.200.241. After several changes to the network addressing, routing scheme, DHCP services, NTP services, layer 2 connectivity, FHRP services, and device security, a trouble ticket has been opened indicating that Client 1 cannot ping the 209.65.200.241 address.
Use the supported commands to isolated the cause of this fault and answer the following questions.
On which device is the fault condition located?
A. ASW1
B. ASW2
C. R3
D. DSW2
E. R1
F. R2
G. R4
H. DSW1
Answer: G
Explanation:
Explanation
On R4, in the redistribution of EIGRP routing protocol, we need to change name of route-map to resolve the issue. It references route-map OSPF_to_EIGRP but the actual route map is called OSPF->EIGRP.