Answer:
D. $3,000
Explanation:
The shareholder's tax basis =
SYBIL tax basis in the property transferred + gain recognized - cash received of $2,000 - the liability assumed by the corporation.
$5,000 + $1,000 - $2000 - $1,000 = $3,000.
If Sybil sells the stock for $3,000, no gain or loss will be recognized, an amount equal to the gain deferred of $0.
<span>Households buy financial assets such as stocks and bonds. The purchase of stocks and bonds are considered loans and not goods or other services. Newly produced capital is a good thing for the economy. However, the initial purchase of a financial asset is not.</span>
A consumer will respond to the price change in such a way that it could express it marginal utility
Answer:
None of the options are correct as the price today will be $26.786
Explanation:
The price of a stock whose dividends are expected to grow at a constant rate forever can be calculated using the constant growth model of the dividend discount model approach (DDM). The DDM bases the value of a stock on the present value of the future expected dividends from the stock.
The formula for price under constant growth model is,
P0 = D1 / (r - g)
Where,
- D1 is the dividend expected for the next period
- r is the required rate of return or cost of equity
- g is the growth rate in dividends
However, as the constant growth rate in dividends is to be applied from Year 2 onwards, we will use the D2 to calculate the price at Year 1 and we will then discount this further for one year to calculate the price today.
P1 or Year1 price = 2 * (1+0.05) / (0.12 - 0.05)
P1 or Year 1 price = $30
The price of the stock today or P0 will be,
P0 = 30 / (1+0.12)
P0 = $26.786
