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Anettt [7]
3 years ago
8

TMS just paid an annual dividend of $2.84 per share on its stock. The dividends are expected to grow at a constant rate of 1.85

percent per year. If investors require a rate of return of 10.4 percent, what will be the stock price be in Year 11
Business
1 answer:
bija089 [108]3 years ago
5 0

Answer:

$41.39

Explanation:

Data provided in the question:

Annul Dividend paid, D0 = $2.84 per share

Growth rate, g = 1.85% = 0.0185

Rate of return required, r = 10.4% = 0.104

Now,

Current price of the stock at year 11 = D12 ÷ [ r - g]

= [ $2.84 × (1 + g)¹²] ÷ [ r - g]

=  [ $2.84 × (1 + 0.0185)¹²] ÷ [ 0.104 - 0.0185]

= 3.539 ÷ 0.0855

= $41.39

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Nancy sold three capital assets that were held for investment. She sold stock in ABC Corporation for a gain of $10,000; stock in
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Answer:

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Explanation:

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Nancy sold three capital assets that were held for investment. She sold stock in ABC Corporation for a gain of $10,000; stock in XYZ Corporation for a gain of $2,000; and corporate bonds for a loss of $20,000. Assuming all of the investments had a long-term holding period, how will the transactions be treated for tax purposes?

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C) Net loss of $8,000 that results in no deduction in the current year, but can be carried forward to offset capital gains for the next year

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The explanation to the answer is therefore presented as follows:

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Particulars                                                                            $  

Gain from the sale of stock in ABC Corporation          10,000

Gain from the sale of stock in XYZ Corporation            2,000

Loss from the sale of corporate bonds                     <u>  (20,000)  </u>

Net capital gain (loss)                                              <u>     (8,000)  </u>

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From the net capital gain computed above, the correct option is D. That is, the $8,000 loss will be treated for tax purposes as a $3,000 deduction against ordinary income in the current year with the remaining $5,000 capital loss carried forward to offset income for next year.

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3 years ago
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Answer:

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Answer:

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