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Levart [38]
3 years ago
6

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years, because

the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $18 per share exactly 10 years from today and will increase the dividend by 6 percent per year thereafter. If the required return on this stock is 13 percent, what is the current share price
Business
1 answer:
Ierofanga [76]3 years ago
4 0

Answer:

The current share price $85.60

Explanation:

Share Price is the present value of all the future dividends associated with that share.

Use following formula to calculate the value of share at year 9.

Price of share at year 9 = Dividend  / ( Required rate of return - growth rate )

Price of share at year 9 = $18 / ( 13% - 6% )

Price of share at year 9 = $257.14

The Current Price of the bond can be calculated by discounting the Price of share at year 9.

Current Price = Price of share at year 9 x (  1 + r )^-n

Current Price = $257.14 x (  1 + 13% )^-9

Current Price = $85.60

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Answer:

A. $287,000

B. $192,050

Explanation:

a. Based on the information givenwe were told that company ABC had net income of the amount of $287,000 after deducting Robert's salary of the amount of $86,100 which therefore means that ROBERT'S QUALIFIED BUSINESS INCOME will be the amount of $287,000.

b. Calculation to determine whether your answer to part (a) would change if you determined that reasonable compensation for someone with Robert's experience and responsibilities is $181,050

Based on the information given the amount of $192,050 will be the additional amount of salary that can be deducted which is Calculated as:

=[$287,000 - ($181,050-$86,100)]

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3 years ago
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7 0
3 years ago
Which best describes a way people can use personal loans? to buy a house to buy a car to pay for college to pay for groceries
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Personal loans are unsecured loans offered by financial institutions based on factors such as employment history, repayment capacity, income level, profession, and credit history.

<h3>How do personal loans work?</h3>

When you are approved for a personal loan, the funds are often sent directly into your checking account. When you acquire a loan to refinance current debt, you can occasionally ask your lender to pay your invoices directly.

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Thus, Option D is correct which describes personal loans.

For more information about Personal loans refer to the link:

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8 0
2 years ago
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Explanation: trust me

6 0
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Answer:

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