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Tatiana [17]
3 years ago
5

Temple Lunch​ Trucks, Inc. just paid a dividend of​ $2.00. Dividends are expected to grow at a rate of​ 3% per year from here on

out. If the​ risk-free rate is​ 2%, the MRP is​ 8%, and Temple Lunch​ Trucks’ stock is only​ 40% as risky as the​ market, what is the most that you should be willing to pay for a share of this stock​ today?
Business
1 answer:
scoray [572]3 years ago
6 0

Answer:

= $93.64

Explanation:

Price = D1/ (r-g)

D1 = Dividend next year =D0(1+g)

D1 = 2(1.03) =2.06

g; growth rate = 3%

r= required return (Use CAPM to find it) as shown below;

CAPM ;r = risk free + beta(MRP)

beta = 40% *1  ( since market beta  is equal to 1)

therefore, Beta = 0.4

CAPM; r = 2% + (0.4*8%) = 5.2%

Next, use the rate of return i.e 5.2% , to calculate the price of the stock;

Price = D1/ (r-g)

= 2.06 / (5.2% -3%)

Price = $93.64

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Answer:

b. the principle of rights.

Explanation:

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3 years ago
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Answer:

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Explanation:

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3 years ago
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Assume the following exchange rates: $1 = NZ$3, NZ$1 = MXP2, and $1 = MXP7. Given this information, as you and others perform tr
Vika [28.1K]

Answer:

c. Appreciate; Appreciate

Explanation:

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This cases are very rare and for a quite short period of time so there are very few traders who takes the advantange of them.

Lets study th given cases here:

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The exchage rate is 1NZ$= 2 Mexican Pesos (MXP)

But if we apply the triangular arbitrage:

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and we know tha 1 US$= 7 Mexican Pesos (MXP

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So the NZ dollar appreciates

B) MXP Versus U$S

The exchage rate is 1 MXP= (1/7) U$S

But if we apply the triangular arbitrage:

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Answer:

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Answer and Explanation:

The Preparation of balance sheet is shown below:-

                                       Balance Sheet

Current liability

Long term debt of Current portion $40,100,000

Long term liability

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So, to reach the total liabilities we simply add the long term debt of current portion with notes payable.

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