Answer:
C. provide a sufficient equity base to protect creditors' claims
Explanation:
- The capital impairments are when a company losses its asset and s a sort of restricting that is established to give a sufficient base to the protector credit claims as to when the dollar dividends and adjustment in earnings increases.
- The dividend policy will not affect the total values of the forms issued capital and thus the capital impairment will be minimized in a most possible manner.
Answer: $52,431.50
Explanation:
The liability reported will be the present value of the six payments of $11,000.
Since this is a constant amount, it will be an annuity:
= 11,000 * Present value interest factor of an annuity, 6 years, 7%
= 11,000 * 4.7665
= $52,431.50
<em>Any difference between this and any options given is down to rounding errors. Pick the closest figure. </em>
Answer:
Explanation:
Calculation for 5th year dividend.
Year Dividend Growth Dividend
1 1.23 1.18 1.45
2 1.45 1.18 1.71
3 1.71 1.18 2.02
4 2.02 1.18 2.38
5 2.38 1.18 2.81
Now we find EPS for 5th year through payout ratio.
EPS5 = D5 / Payout ratio
EPS5 = $2.81 / 0.30
EPS5 = $9.37
Calculation for price.
P0 = Benchmark PE ratio x EPS5
P0 = 18 ($9.37)
P0 = $168.66
B. What is the stock price today.
Year Dividend Table value at 14% PV of dividend
1 1.45 0.8771 1.27
2 1.71 0.7694 1.32
3 2.02 0.6749 1.36
4 2.38 0.5920 1.41
5 171.47 0.5193 89.04
Total 94.40
Stock price today = $94.40
Answer:
Longly will receive $1,817.43 from selling the bond.
Explanation:
As the coupon rate is 8%; we have annual coupon payment = 2,000 x 8% = $160.
The price of the bond Longly will receive is equal to the present value of 20 annual coupon payment plus the present value of $2,000 face value repayment in 20 years time; with the two streams of cash flow discounting at the market rate at the date of issuing 9%; which is calculated as:
[ ( 160/9%) x [ 1 - 1.09^(-20) ] ] + ( 2,000 / 1.09^20 ) = $1,817.43.
So, the answer is $1,817.43.
