Answer:
$26.617
Explanation:
Stock price = D1 ÷ (r - g)
where,
D1 = next expected dividend
r = required return = 14 percent
g = growth rate = 2.8 percent
Therefore, the stock price will be as follows:
= [$2.90 × (1 + 2.8%)] ÷ (14% - 2.8%)
= 2.9812 ÷ 11.2%
= $26.617
Therefore, one share of this stock worth $26.617 today if I require a 14 percent rate of return.
Gross income is an individual's total personal income, before accounting for taxes or deductions. It is the starting point for determining Federal and state income tax of individuals, corporations, estates and trusts, whether resident or nonresident. Hope this helps.
Answer:
The return from the bond is 5% per year before tax. And the tax is 32%.
After tax rate of return = Interest rate * (1-tax rate)
= 5% * (1-32%)
= 0.05 * 0.68
= 0.034
= 3.4%
Thus, the after tax of return from the bond is 3.4%
The interest of the taxable income corporate bond is taxed annually. Hence, the change in the investment maturity period would not affect the after tax rate of return from bond. The annual after tax rate of bond would not change irrespective of the investment maturity period. The after tax rate of return of corporate bonds would be the same 3.4% even in the case of 10 years maturity period.
Answer:
The price an investor would be expected to pay per share ten years in the future is $17.61
Explanation:
P10 = [D1*(1 + g)^n]/(k – g)
Where:
P10 is the expected share price after ten years
D1 is the expected dividend for year 1 = $ 1.70
g is the dividend growth rate per year but we know that dividend is expected to be constant, g = 0
k is the cost of capital for the company = 8.2%
n is the number of years to calculate share price = 10
P10 = $ 1.55*(1 + 0%)^10/(0.088 – 0)
= $ 1.55/0.088
= $17.61
Therefore, The price an investor would be expected to pay per share ten years in the future is $17.61