<u>Explanation:</u>
Business environment refers to the factors pertaining to internal or external to the organisation that affects the working of the organisation. The environment provides threats and challenges for the business organisations. So the business organisations should know about their environment to smoothly function the business activities.
Economic environment means the economic situation in a country that affects the business and consumer behavior in a country. The performance of the organisation can be affected by the buying pattern of the consumers. Economic environment is an external and macro environment factor which affects the business.
Answer:
C. Buddy cannot be a creditor of the corporation after the redemption.
Explanation:
"A stock redemption that terminates a shareholder’s entire stock ownership in a corporation will qualify for sale or exchange treatment under § 302(b)(3). The attribution rules generally apply in determining whether the shareholder’s stock ownership has been completely terminated. However, the family attribution rules do not apply to a complete termination redemption if the following conditions are met:
The former shareholder has no interest, other than that of a creditor, in the corporation for at least 10 years after the redemption (including an interest as an officer, director, or employee).
The former shareholder files an agreement to notify the IRS of any prohibited interest acquired within the 10-year period and to retain all necessary records pertaining to the redemption during this time period."
Reference: South-Western, Thomson. “Chapter 5.” To Qualify for Sale or Exchange Treatment, a Stock Redemption Generally Must Result in a Substantial Reduction in a Shareholde, 2005,
Answer:
In order to find the price of a stock which has different growth rate at different periods, we need to find the price at a time when the growth rate slows down after the initial burst of growth and is stable, in this case its in the 4th period.
Year 4 dividend = 2.07
Growth rate (G)= 8%
Required return (R)= 12%
DDM formula for stock price = D*(1+G)/R-G
2.07*(1+0.08)/0.04
=55.89
The maximum that you should be willing to pay for the stock 4 years from now is $55.89 but in order to find out what the maximum we should pay for the stock now, we need to discount this price 4 years back to the present value using the required return of 12 %
so 55.89/1.12^4=35.52
The maximum that you should be willing to pay for the stock now is $35.52
Explanation:
Answer:
Explanation:
a )
Standard of living is calculated as follows
Standard of living = Real GDP / Population
Growth in standard of living = growth in real GDP - growth in population
Now given growth in standard of living = 0
0 = growth in real GDP - growth in population
growth in real GDP = growth in population
growth in real GDP = 1%
Therefore, to keep living standards from falling, production have to increase by 1 %.
b )
If workforce increases by 1 % , that means population increases by 1 % and
productivity ( MPP ) increases by 1 % that means GDP increases by 1 %
Hence
Growth in standard of living = 1 % - 1 % = 0
The living standard will remain stagnant .
