Answer:
A) Because Joe and Mike work for un-affiliated broker/dealers, they are not permitted to share or split commissions, making this arrangement un-acceptable.
Explanation:
Even though Joe and Mike are friends and know each other for a long time, in the real world where money has an almost divine status, they must follow the rules. Commissions can only be split between agents that work for the same broker-dealer firm and are registered to work in the same state.
Since Joe and Mike work for unaffiliated broker-dealers, they cannot share clients or split commissions. Following the rules will not only help them professionally, but probably will help their friendship.
Answer:
McCann Co.
Present value
a. At 9$ = $2,017.38
b. At 16% = $3,379.42
c. At 25% = $2,798.71
Explanation:
a) Data and Calculations:
Year Cash Flow Discount Present
Factor at 9% Value
1 $840 0.917 $770.28
2 1,170 0.842 143.14
3 1,430 0.772 1,103.96
4 1,575 0.708 1,115.10
Total Present value = $2,017.38
Year Cash Flow Discount Present
Factor at 16% Value
1 $840 0.862 $724.08
2 1,170 0.743 869.31
3 1,430 0.641 916.63
4 1,575 0.552 869.40
Total Present value = $3,379.42
Year Cash Flow Discount Present
Factor at 25% Value
1 $840 0.800 $672.00
2 1,170 0.640 748.80
3 1,430 0.512 732.16
4 1,575 0.410 645.75
Total Present value = $2,798.71
Answer:
Market capitalization = $262.80 bil
Stock price = $584.00 per share
Explanation:
Share repurchase and cash dividend have the same nature, which is distributions made to shareholders of company. So, we can apply Dividend Discount Model (DDM) to value the stock of Amazon.
DDM is stated as below:
V_o = [D_o x (1 + g)]/(r - g), where:
V_o: Current intrinsic value of the company;
D_o: Current dividend/Share repurchased in cash;
g: Dividend growth;
r: cost of equity.
Putting all the number together, we have:
V_o = [2.95 x (1 + 6.9%)]/(8.1% - 6.9%) = $262.80 bil
Amazon stock price = Market capitalization/number of shares outstanding = $262.80 bil/450 mil = $584.00 per share
