Michael's, Inc. just paid $2.75 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 5.90 percent. If you require a rate of return of 10.1 percent, how much are you willing to pay today to purchase one share of Michael's stock?

$69.34

Explanation:

The computation of today one share of stock is shown below:

= (Next year dividend) ÷ (Required rate of return - growth rate)

where,

Next year dividend is

= $2.75 + $2.75 × 5.90%

= $2.75 + 0.16225

= $2.91225

And, the required rate of return is 10.1%

Plus, the growth rate is 5.90%

So, the today price is

= ($2.91225) ÷ (10.1% - 5.90%)

= ($2.91225) ÷ (4.2%)

= $69.34

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.