Answer:
The answer is $41.2
Explanation:
This will be solved by Dividend Discount Model which is one of the ways of valuing the price of shareholders' equity.
Here, the future value of dividend payment are discounted using the cost of equity.
Ke = D1/Po + g
Where Ke is the cost of equity
D1 is future dividend payment.
Po is the current share price or stock price
g is the growth rate.
To find the current price of stock price, we need to re write the equation;
Po = D1 ÷ (Ke - g)
D1 = Do x 1.03
= $2 x 1.03
=2.06
Ke = 8% or 0.08
g = 3% or 0.03
So we have;
2.06 ÷ (0.08 -0.03)
$2.06 ÷ 0.05
$41.2
Answer:
Separate legal entity and taxation process
Explanation:
In a corporation, unlike in other forms of business, the owners and business are treated separately under the law. This principle is referred to as separate legal entity concept.
So for any contracts or deals entered into by a corporation, the owners cannot be held personally liable or asked to make good the losses incurred due to entering into those contracts unless of course if owners acted with mala fide intentions to earn personal profits. In short, owners personal assets cannot be taken away.
Secondly, the taxation slab applicable to corporations is also different in the sense corporations pay taxes on dividend paid. Secondly, when such dividend forms part of the revenue of shareholders, tax is again paid on that dividend income, this time by the shareholder. So in a way, shareholders get taxed twice, since in the first case, the company paying dividend recovers the tax on dividend paid from shareholders. This is referred to double taxation.
Answer:
Balance after adjustment will be a credit of $90,000
Explanation:
<em>Particulars Amount</em>
Non-collectible accounts $108,000
Credit balance <u>$18,000</u>
Balance Adjustment <u>$90,000</u>
Balance after adjustment will be a credit of $90,000
Note: Non-collectible accounts = 2% * $5,400,000 =$108000
Answer: The correct answer is "C. The total effective interest over the term to maturity is equal to the amount of the discount plus the total cash interest paid."
Explanation: When the bonds are issued at a discount, in the bond amortization schedule the total effective interest over the term to maturity is equal to the amount of the discount plus the total cash interest paid.
Answer:
Wang Min's situation:
Boston: 151
San Francisco: 135
If Wang Min wishes to consider a similar offer in Boston, the offer should be for at least = ($25,000/135) x 151 = <u>$27,963</u>. Since San Francisco is "cheaper" than Boston, she should earn more money in Boston in order to consider a comparable offer.
Roger's situation:
Cleveland: 99
San Francisco: 135
If Roger wishes to consider a similar offer in Cleveland, the offer should be for at least = ($30,000/135) x 99 = <u>$22,000</u>. Since San Francisco is "more expensive" than Cleveland, he should earn less money in Cleveland in order to consider a comparable offer.