In a progressive tax system, taxes decrease as income increases.<br><br> True or False?

Creme Bakery just paid an annual dividend of $2.20 a share and is expected to increase that amount by 2.2 percent per year. If y

alekssr [168]

Answer:

$19.47

Explanation:

The computation of the price paid for share is shown below:

= Year second dividend ÷ (Required rate of return - growth rate)

where,

Next year dividend is

= $2.20 + $2.20 × 2.2%

= $2.20 + $0.0484

= $2.2484

In the year 2 , it is

= $2.2484 × 1.022

= $2.2978648

And, the required rate of return is 14%

Plus the growth rate is 2.2%

So, the price paid for the share is

= ( $2.2978648) ÷ (14% - 2.2%)

= $19.47

7 0

4 years ago

AMC Corporation currently has an enterprise value (EV) of $400 million and $100 million in excess cash. The firm has 10 million

algol [13]

Answer:

a. AMC's share price prior to the share repurchase is $ 50 per share

b. AMC's share price after the repurchase if its enterprise value goes up is $75.00 per share

Explanation:

a. In order to calculate AMC's share price prior to the share repurchase we would have to make the following calculation:

AMC's share price prior to the share repurchase=Market Capitalization/Number of shares outstanding

According to the given data Number of shares outstanding=10 million shares

Market Capitalization=Enterprise Value + Cash in Hand

Market Capitalization=$400 million + $100 million

Market Capitalization=$500 million

Therefore, AMC's share price prior to the share repurchase=$500 Million / 10 million shares

AMC's share price prior to the share repurchase= $ 50 per share

b. To calculate AMC's share price after the repurchase if its enterprise value goes up we would have to make the following calculation:

AMC's share price after the repurchase if its enterprise value goes up=Market Capitalization/Number of shares outstanding after repurchase

According to the given data After the share repurchase, news will come out that will change AMC's enterprise value to $600 million, hence, Market Capitalization=$600 million

Number of shares outstanding after repurchase=Number of shares outstanding-Number of shares repurchased

Number of shares repurchased= Cash used for repurchase / Market Price per share

Number of shares repurchased=$ 100 million / $ 50 per share

Number of shares repurchased= 2 million shares

Hence, Number of shares outstanding after repurchase=10 million - 2 million

Number of shares outstanding after repurchase=8 million

Therefore, AMC's share price after the repurchase if its enterprise value goes up=$600 million/ 8 million

AMC's share price after the repurchase if its enterprise value goes up=$75.00 per share

5 0

3 years ago

Consider the data on expected returns and betas for a variety of assets in the table below. what is the expected return on share

artcher [175]

I hate your answer choice

6 0

3 years ago

On January 1, Fey Properties collected $7,200 for six months’ rent in advance from a tenant renting an apartment. Fey Properties

Leokris [45]

Answer:

A. Debit Unearned rent revenue for $1,200 and Credit Rent revenue for $1,200

Explanation:

The Journal entry is shown below:-

1. Cash Dr, $7,200

To unearned rent revenue $7,200

(Being six month advance rent is recorded)

2. Unearned rent revenue Dr, $1,200

($7,200 ÷ 6 months) × 1 month

To Rent revenue $1,200

(Being rent earned is recorded)

7 0

3 years ago

Jacob went to the grocery store to buy breakfast cereal. He picked up a few cereal boxes to look up their ingredients. However,

andriy [413]

Answer: The correct answer is "c. bounded rationality".

Explanation: Jacob's decision is an example of bounded rationality, because according to the theory of limited rationality, people make decisions only partially in a rational way because of our cognitive, information and time constraints.

4 0

4 years ago

In a progressive tax system, taxes decrease as income increases. True or False?