If this question has the same set of choices like the other ones posted here, then the answer would be letter C. 529 plan- money you save.
Answer:
The answer is 12.83%.
Explanation:
We have the below calculations:
- Coupon payment = 1,000 x 9% = $90;
- Purchasing price = $1,000;
- Price sold after 3 years is equal to the present value of 9 annual coupon payments plus face value repayment after 9 years, discounted at YTM at the time of sell at 7%;
=> Price after 3 year = (90/0.07) x ( 1- 1.07^-9) + 1,000/1.07^9 = $1,130.3;
The holding period yield (HPY) is the discount rate that equalizes cash flow from 3 years of holding the bond to its original purchased price:
1,000 = (90/HPY) x [1 - (1+HPY)^-3] + 1,130.3/ (1+HPY)^3 <=> HPY = 12.83%.
The size of the dividend per share of stock depend on : The corporation's profit
Dividend per share is calculated by : Total dividend / Total shares outstanding,
Which mean that dividend per share will increase if the total dividend increases.
Meanwhile total dividend will increased if the company gains more profit
Answer:
Should Marston Manufacturing Company accept or reject the project?
Marston C Company should reject the project because its expected return is lower than Division H's cost of capital.
Since the divisions' risk is so different, and probably their projects are also very different, the company should use different costs of capital to accept of reject the projects based on each division's cost of capital.
Imagine another situation where Division L is evaluating a project that yields 10%. If they used the company's WACC, then they should reject the project, but if they used the division's cost of capital, then they should accept the project (in this case I would recommend accepting it).
Explanation:
Division H's risk = 14%
Division L's risk = 8%
WACC = 11%