Answer:
$5.73(Approx).
Explanation:
Given:
= 0.32
Growth rate = 25% = 0.25
Number of year = 4
Growth rate after 4 year = 3% = 0.03
Required rate of return = 15% = 0.15
Computation of divined in 4 year:
Price of stock after year 4 = [Divined in 4 year × (1 + new growth)] /[Required rate of return - Growth rate after 4 year ]
Price of stock after year 4 = [0.78125 × (1+0.03)] / [0.15 - 0.03]
Price of stock after year 4 = [0.8046875] / [0.12]
Price of stock after year 4 = $6.70572917
Present value = Future value / 
Present value = $6.70572917 / 
Present value = $6.70572917 / 
$5.73(Approx).
Answer:
e. None of the above assumptions would invalidate the model
Explanation:
Incomplete question <em>"The constant growth model is given below: P0 = [D0(1 + g)]/[(rs - g)]"</em>
<em />
According to dividend discount model,
P0 = D1/(R-G)
D1 - Dividend at t =1
R - Required rate
G - Growth rate
This would be invalid if R < G. In other words, Dividend growth model will be invalid in only one situation, that is, when growth rate is more than require return. In this situation growth model cannot be used.
Answer:
I think it's A. or C. but I really think it's C.
Answer:
The answer to the following question is $4000.
Explanation:
Dowdy which is a C corporation, has a total of $14,000 in capital gain, in which $8000 comes from sale of tract land and rest of $6000 comes from sale of stock. And the company also has a capital loss of $18,000. So here the company is having a long term capital loss of $4000 ( $18,000 - $14,000 ), and this C corporation can deduct this long term capital loss from their taxable income ( the year in which loss was incurred ) . If in a situation, loss is not deducted from this year , then it can be carried 3 years or 2 years or even 1 years back and if there is capital gain , it can be deducted from it.
