Answer:
15.4%
Explanation:
Calculation to determine your best guess for the rate of return on the stock
The revised estimate on the rate of return on
the stock would be:
Before
14% = α +[4%*1] + [6%*0.4]
α = 14% - 6.4%
α = 7.6%
With the changes:
7.6% + [5%*1] + [7%*0.4]
= 7.6% + 5% + 2.8%
= 15.4%
Therefore your best guess for the rate of return on the stock will be 15.4%
Answer:
a. What is the firm’s taxable income?
387.500
b. What is the tax expense?
81.375
Explanation:
You first need to determine Talley's taxable income:
Income after operating costs: $455,000
Less: Interest Expense -$70,000
Plus: Taxable Dividends Received 2,500
.
Taxable Income: 387.500
Federal tax rate 21%
Tax expense 81.375
