Answer:
The stock price today is $ 29.56
Explanation:
Dividend for year 1, d₁ = $ 3.65
Dividend for year 2, d₂ = $ 2.66
Required rate = 12.3% = 0.123
Growth rate = 3.3% = 0.033
Value after year 2= (d₂ × Growth rate) ÷ (Required rate - Growth rate)
= (2.66 × 1.033) ÷ (0.123 - 0.033)
=30.5308889
Hence current price = Future dividend and value × Present value of discounting factor(rate%,time period)
= (3.65÷1.123) + (2.66÷
) + (30.5308889 ÷
)
=$29.56
Answer: d. A B and C are correct.
Explanation:
A bond's price and it's Yield to Maturity (YTM) are inversely related such that when Yield to Maturity rises, the price of the bond falls. This is a because a higher YTM signifies that the bond is riskier so it will compensate by being cheaper.
If a bond is downgraded by Ratings agencies then it means that the bond is now riskier. As it is riskier investors will charge more interest for taking on the risk. The interest is the YTM and so it rises.
A Subordinate bond means that if the company were to go into bankruptcy for instance, the Subordinate bond would only be paid for after the bond that is not Subordinated. This means that there is a chance that Subordinate bond holders will not get anything from the liquidation of the company. Investors will therefore charge a higher YTM to cater for the risk that this happens.
Answer: substitute
Explanation:
After firm A acquired firm B, it raised the prices for the goods produced by both firms. This can increase profits if those goods are substitutes.
Substitute goods are the goods that serve thesame functions and one can be used to replace the other one. Since both goods produced are substitutes, that means when there's price increase, even though consumers shift from one good to another, there's still rise in price which will increase profits
Answer:
- $454
Explanation:
Net Operating Profit after tax = Net operating profit before tax - tax rate
= $1,800 - 20%
= $360
Economic Value Added:
= Net Operating Profit after tax - (Capital Invested × Weighted average cost of capital )
= $360 - [($8,500 - $1,100) × 11%]
= $360 - ($7,400 × 11%)
= $360 - $814
= - $454
Answer:
The answer is: Edgar will receive $37,000
Explanation:
- Dowd's share of the company's losses is $80,000
- Edgar's share of the company's losses is $60,000
- Frost's share of the company's losses is $40,000
- Grant's share of the company's losses is $20,000
But since Grant is not willing to give more money to the partnership to cover his losses, the $9,000 difference must be divided by the remaining three partners. So they will divide Grant's losses as follows:
- Dowd's share of the Grant's losses is $3,600
- Edgar's share of the Grant's losses is $2,700
- Frost's share of the Grant's losses is $1,800
Then you add up all the losses the three remaining partners had:
- Dowd' total losses $83,600
- Edgar's total losses $62,700
- Frost's total losses $21,800
So when the partnership was dissolved, Edgar should have received $100,000 (capital) - $62,700 (total losses) = $37,200
I selected answer A since they probably rounded down Edgar's share to $37,000 (nearest possible choice).
