Answer:
$63.27
Explanation:
Calculation of how much should you pay on the stock today
First step
The Price of stock 19 years from now will be:.
20/0.075
= 266.67
Second step
The Price of stock today will be :
The price of stock from 19 years from now which is:
250 / (1.075)^19
=250/3.951489
=$63.27
Therefore how much should you pay on the stock today will be $63.27
Answer:
Full funding policy.
Explanation:
This would be a violation of Full funding policy.
Full funding strategy is a federal budgeting requirement implemented by Congress in the 1950s on the Department of Defense (DOD) that mandates all acquisition expenses of a weapons or piece of military equipment to be financed in the year the object is procured. Hence in the above example there is violation of Full funding strategy.
Answer:
If your required return on KacieCo stock is 15 %, the most you would be willing to pay for the stock today if you plan to sell the stock in two years is $26.43
Explanation:
Accoring to the given data we have the following:
D1= $3
D2=$3.50
P2=$28
Ks=15%
Therefore, in order to calculate the most P0 you would be willing to pay for the stock today if you plan to sell the stock in two years, you would have to use the following formula:
P0 = PV of D1 + Pv of D2 + PV of P2
P0 = D1/(1+ks)^1 + D2/(1+Ks)^2 + P2/(1+Ks)^2
P0 = 3/(1+15%) + 3.5/(1+15%)^2 + 28/(1+15%)^2 = $26.43
Answer:
The market risk premium is 9.3%
Explanation:
Market risk premium can be obtained by calculating the difference between the expected return on the market and the risk-free rate.
In the question given, the risk rate fee refers to the US treasury bill.
Therefore,
Market risk premium = market rate-risk free rate
= (12.6% - 3.3%)
= 9.3%
So, in the question given, the market risk premium is
9.3%
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