Answer:
The value of the stock = $19.64
Explanation:
According to the dividend valuation model, <em>the value of a stock is the present value of the expected future cash flows from the stock discounted at the the required rate of return.</em>
Year Workings Present value(PV)
1 $1 × (1.22) × 1.11^(-1) = 1.10
2 $1 × (1.22)^2 ×(1.11)^(-2) = 1.21
3 $1 × ((1.22)^2 × (1.05))/0.11-0.05) = 21.35 ( PV in year 2 terms)
PV (in year 0) of Year 3 dividend = 21.35 × 1.11^(-2)
= 17.33 (see notes)
<em>The value of the stock</em> = $1.10+ $1.21 + 17.3
= $19.64
Notes:
<em>Note the growth applied to year 3 dividend gives the PV in year 2 terms. So we need to re-discount again to year 0.</em>
<em />
The value of the stock = $19.64
Answer and Explanation:
a. The computation is shown below;
Cash bonus after tax is ($3,000 × (1 - 0.24) $2,280
And, non taxable fringe benefit is $2,300
So here he should use the nontaxable fringe benefit
b. Yes answer would be changed
Cash bonus after tax is ($3,000 × (1 - 0.12) $2,640
And, non taxable fringe benefit is $2,300
hence, the same is to be considered
Answer:
C. Reduced prices of Sony televisions resulted in an increase in the quantity demanded.
Explanation:
Sony is a well known brand . What could explain a sudden double increase in sales while other brands' didn't is most likely a reduction in in prices of Sony products. It is a well known brand and they sell quality products which customers trust. Having a discounted price means they are offering a sale which customers would want to take advantage of.
Answer:
$26.67 million
Explanation:
The computation of price per share is shown below:-
Total market value = $1,150 million + $120 million
= $1,270 million
Market value of equity = Total market value - value of debt - value of preferred stock
= $1,270 million - ($120 million + $300 million + $50 million)
= $1,270 million - $470 million
= $800 million
Price per share = Market value of equity ÷ Stock outstanding
= $800 million ÷ $30 million
= $26.67 million
