PROBLEMThe PQ partnership has the following plan for the distribution of partnership net income (loss):P QSalaries $60,000 $100,
000Bonus in net income 6% 12%Interest on average capital balances 7% 7%Remainder (if positive) 60% 40%Remainder (if negative) 50% 50% Required:Calculate the distribution of partnership net income (loss) for each independent situation below (for each situation, assume the average capital balance of P is $140,000 and of Q is $240,000).1. Partnership net income is $360,000.2. Partnership net income is $240,000.3. Partnership net loss is $40,000.
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Calculate the expected return using CAPM approach as follows:
How to calculate the price at the end of the year?
Price at the end of year = Price today Expected return
The dividend is deducted from the price at the end of year as after the dividend declaration the stock price tend to reduce. Calculate the expected selling price of share as follows:
Expected selling price = Price at the end of year - Dividend
Therefore, the expected selling price of share is .
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