Answer:
The correct answer is letter "A": It will decrease.
Explanation:
Price floors are price levels the government of a country sets to protect the price of a good will not fall to a level in which producers will not be able to make profits. Since the price level is unlikely to fall,<em> over the years consumers will lose interest in that product and start looking for a substitute at lower prices</em>. <em>The quantity demanded of the price-floor good drops under that scenario.</em>
Answer:
$19,500
Explanation:
Given that,
Bob's outside basis in Freedom, LLC, = $10,000
One-fourth share of the LLC's debt = $2,500
Bob's 704(b) capital account = $17,000
Tom bought Bob's LLC interest = $17,000
Tom's outside basis be in Freedom, LLC:
= Amount paid for interest + share of LLC’s Debt
= $17,000 + $2,500
= $19,500
Answer: c. $2.50
Explanation:
Using the Gordon Growth Model;
Price = Next Dividend / (required return - growth rate)
45.50 = (Dividend * (1 + 9%)) / ( 15% - 9%)
45.50 * 6% = 1.09 * Dividend
2.73 = 1.09 * Dividend
Dividend = 2.73/1.09
= $2.50
Answer:
Market price of bond = $2,166.30
Explanation:
Step 1
<em>Calculate the interest payment per 6 months and number of periods</em>
Interest rate per 6 months = (5.96% × 2000)/2 = 59.6
Number of periods = 19 × 2 = 38 periods
Step 2
<em>Calculate the Present Value (PV) of the interest payment</em>
Yield per six month = 5.3%/2 = 2.65%
PV = A × (1+r)^(-n)
= 59.6× ( (1.0265)^(-38)/0.0265 )
= 59.6 ×23.7685
= $1,416.60
Step 3
<em>Calculate the PV of the Redemption Value (RV)</em>
PV = RV × (1+r)^(-n)
= 2000 × (1.053)^(-19)
= 749.705925
Market price of Bond =1,416.60 + 749.70
= $2,166.30
Market price of bond = $2,166.30