The last dividend on Riverhawk Corporation's common stock was $4.00, and the expected constant growth rate is 10 percent. If you require a rate of return of 20 percent, what is the highest price you should be willing to pay for this stock? $44.00 $38.50 $40.00 $45.69 $50.00

$44.00

Explanation:

Use dividend discount models to answer this question;

Since it has a constant dividend growth rate, use the formula below;

Price(P0) = Div1/ (r-g)

where P0 = current price

Div1 = next year's dividend = Div0 (1+g ) = 4(1.10) = $4.4

r = required rate of return = 20% or 0.20 as a decimal

g = dividend growth rate = 10% or 0.10 as a decimal

P0 = 4.4 / (0.20-0.10)

P0 = 44

Therefore , you should pay $44 for this stock.

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

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explanation: