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NEW QUESTION: 1
Marie Williams, CFA, and David Pacious, CFA, are portfolio managers for Stillwell Managers. Williams and Pacious are attending a conference held by Henri Financial Education on the fundamentals of valuation for common stock, preferred stock, and other assets.
During the conference, the presenter uses an example of four different companies to illustrate the valuation of common stock from the perspective of a minority shareholder.
During the conference, the presenter uses an example of four different companies to illustrate the valuation of common stock from the perspective of a minority shareholder.
* Firm A is a noncyclical consumer products firm with a 50 year history. The firm pays a $1.80 dividend per share and attempts to increase dividends by 4% a year. Earnings and dividends have steadily increased for the past
20 years.
* Firm B is a technology firm. It has never paid a dividend and does not expect to in the near future.
Furthermore, due to large investments in new factories and equipment, the firm is not expected to generate positive free cash flow in the foreseeable future.
* Firm C is an industrial firm with currently very little competition and a dividend growth rate of 9% a year.
However, the profits in its product market have started to attract competitors and it is expected that Firm C's profits will slowly decline such that the dividend growth steadily falls each year until it reaches a growth rate of 4% a year.
* Firm D is a pharmaceutical firm that is currently enjoying high profits and paying dividends. However, the firm's strongest selling drug is coming off patent in three years. With no other drugs in the pipeline, the firm's dividend growth rate is expected to drop abruptly in three years and settle at a lower growth rate.
The next day, Pacious decides to put what he learned into practice. The stock he is valuing, Maple Goods and Services, currently pays a dividend of $3.00. The dividend growth rate is 25% and is expected to steadily decline over the next 8 years to a stable rate of 7% thereafter. Given its risk, Pacious estimates that the required return is 5%.
Williams analyzes the value of Mataka Plastics stock. Its dividend is expected to grow at a rate of 18% for the next four years, after which it will grow at 4%. This year's dividend is $5.00 and Williams estimates the required return at 15%.
From the seminar, Pacious learned that a firm's health can be gauged by the present value of its future investment opportunities (PVGO). Tackling a calculation, he uses the following example for Wood Athletic Supplies:
Stock price $90.00
Current earnings $5.50
Expected earnings $6.00
Required return on stock 15%
Pacious and Williams discuss the characteristics of firms in various stages of growth, where firms experience an initial growth phase, a transitional phase, and a maturity phase in their life. They both agree that the Gordon Growth Model is not always appropriate. Pacious makes the following statements.
Statement I: For firms in the initial growth phase, earnings are rapidly increasing, there are little or no dividends, and there is heavy reinvestment. The return on equity is, however, higher than the required return on the stock, the free cash flows to equity are positive, and the profit margin is high.
Statement 2: When estimating the terminal value in the three-stage dividend growth model, it can be estimated using the Gordon Growth Model or a price-multiple approach.
Which of the following is closest to the current value for Mataka Plastics stock?
A. $81.60.
B. $62.49.
C. $73.73.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
If you grow the $5-00 dividend out for four years at 18%, the first four dividends are:

Discounting the dividends from the end of year four to perpetuity using the dividend discount model, you obtain:
10.0816/(0.15 - 0.04) - $91.65. Discounting this figure back to the present, you have 91.65/(1.1 )= $52.40 Summing up the present values of all the above (5.13 + 5.26 + 5.40 + 5.54 + 52.40), you have a total price of $73.73.
Note that your answer may differ slightly from the answer above due to rounding. (Study Session 11, LOS
40.m)

NEW QUESTION: 2

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

NEW QUESTION: 3
A customer has enabled Developer mode on the BlackBerry 10 (BB10). The customer connects the device to a computer and is unable to access the BB10 to load the custom BB10 application. What is the most likely cause for this?
A. The USB dhver is not the correct version and needs to be updated to a version that contains the kernel mode driver that allows Developer Mode access.
B. The USB driver was not initialized properly and the BB10 does not present all available interfaces, which prevents the operating system from detecting the Developer Mode IP Address.
C. The BlackBerry Network Device driver was not installed and the USB connected BB10 does not present its IP Address specified to the operating system of the attached computer.
D. The assigned Developer Mode IP address is conflicting with an already present IP address on the network to which the attached computer has a network connection.
Answer: C

NEW QUESTION: 4
In which scenario is the Import Data Wizard method recommended for Microsoft Dynamics 365?
A. A small company with data on-premises that has never used a Customer Relationship Management (CRM) application.
B. A large company with Customer Relationship Management (CRM) application data that is stored on the same data center as Microsoft Dynamics 365.
C. A small company that currently uses Microsoft Dynamics 365, Business edition and wants to migrate to Enterprise edition.
D. A large company with data on-premises that currently uses Microsoft Dynamics AX and has it staged in Microsoft Azure.
Answer: A
Explanation:
Explanation
References:
https://www.microsoft.com/en-US/dynamics/crm-customer-center/import-accounts-leads-or-other-datA.aspx


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