Answer:
The correct answer to the problem is 7.728%
Explanation:
Lucas marginal tax rate = 32 percent
Tax rate on dividends = 16 percent
Dividend yield of a dividend-paying stock (with no growth potential) = 9.20 percent.
To determine the interest rate a municipal bond have to offer for Lucas to be indifferent between the two investments from a cash flow perspective =
Dividend yield multiplied by ( 1- tax rate on dividends)
= 9.20% × (1 - 16%)
= 0.092 × (1 - 0.16)
= 0.092 × 0.84
= 7.728%
Answer:
D.
Explanation:
A economic model can be used to explain or predict economic phenomena, because every model has to have key variables that command the economic decisions and operations.
An economic model is define to get a specific goal, so when some problem comes, you can study every decision based on the model applied, that 'simplifies' solutions, or even better, you must be able to predict when economic problems will arrive.
Answer:
(a) 9.9%
(b) 10.09%
The further explanation is given below.
Explanation:
The given values are:
Coupon payment
= $99
Price
= $1,000
(a)
The Yield to maturity (YTM) will be:
= 
where,
C = Coupon payment
P = Price
n = years to maturity
F = Face value
On putting the estimated values is the above formula, we get
⇒ 
⇒ 
⇒ 
%
(b)
Although the 1st year coupon was indeed reinvested outside an interest rate of r%, cumulative money raised will indeed be made at the end of 2nd year.
= ![[99\times (1 + r)] + 1,099](https://tex.z-dn.net/?f=%5B99%5Ctimes%20%281%20%2B%20r%29%5D%20%2B%201%2C099)
Came to the realization compound YTM is therefore a function of r, as is shown throughout the table below:
Rate (r) Total proceeds Realized YTM (
)
7.9% 1205.8 9.8%
9.9% 1207.8 9.9%
11.9% 1209.8 9.99%
Now,
Overall proceeds realized YTM:
= 
= 
= 
= 
= 
= 
= 
%
Answer:
$8,584
Explanation:
Cost of ending inventory can be calculated by multiplying the remaining units of the given month by their purchase cost in the following month
DATA
Total remaining units n ending inventory = 58 units
10 from January at $128
12 from February at $138
14 from May at $148
12 from September at $158
10 from November at $168
Calculation
January = 10 x $128 = $1,280
February = 12 x $138 = $1,656
May = 14 x $148 = $2,072
September = 12 x $158 = $1,896
November = 10 x $168 = $1,680
Cost of ending inventory = $8,584
