Answer:
13.968%
Explanation:
Discount is defined as a deduction from the selling price of a product, and it is used as a way to attract more customers by using price advantage compared to competitors.
The following formula can be used to calculate discount
Discount rate = Rate of return + Competitor's beta (market risk premium)
Discount rate = 0.031 + 1.43(0.076)
Discount rate= 0.13968= 13.968%
Answer:
EPS
Plan I $2.03 per share
Plan II $1.78 per share
Explanation:
Plan I
As this plan is all equity plan, so there is no debt and no interest expense as well.
In the absence of taxes, We will use the EBIT in the calculation of EPS
EPS = Net Earning / Outstanding numbers of shares = $375,000 / 185,000 = $2.03 per share
Plan II
In this levered plan we have debt and equity combination. We also have to deduct the interest expense from EBIT to calculate the net income.
Interest Expense = $2,700,000 x 5% = $135,000
Net Income = EBIT - Interest Expense = $375,000 - $135,000 = $240,000
EPS = Net Income / Outstanding numbers of shares = $240,000 / 135,000 = $1.8 per share
Answer:
A. D1 = 1.50*1.06 = 1.59
D2 = 1.59*1.06 = 1.69
D3 = 1.69*1.06 = 1.79
B. PV of D1=(1.50*1.06)/1.13^1=1.41
PV of D2=(1.50*1.06^2)/1.13^2=1.32
PV of D3=(1.50*1.06^3)/1.13^3=1.24
PV of all dividend = (1.50*1.06)/1.13^1 + (1.5*1.06^2)/1.13^2 + (1.5*1.06^3)/1.13^3
PV of all dividend = 1.59/1.13 + 1.6854/1.2769 + 1.786524/1.442897
PV of all dividend = 1.407079646 + 1.319915 + 1.238150748
PV of all dividend = 3.965145814288893
PV of all dividend = 3.97
C. PV = 27.05/(1+13%)^3
PV = 27.05/(1.13)^3
PV = 27.05/1.442897
PV = 18.74701
PV = 18.75
D. The most you should pay for it
:
= (1.50*1.06)/1.13^1+(1.5*1.06^2)/1.13^2+(1.5*1.06^3)/1.13^3+27.05/1.13^3
=22.71
E. Value = (1.50*1.06)/(13%-6%)
Value = 1.59 / 7%
Value = 1.59 / 0.07
Value = 22.714286
Value =22.71
F. No, the value is not dependent on the holding period, you can see from above that the value of infinite time period estimated in E equals to the value calculated when there was 3 years holding period.
Answer:
The change in the value of the bond is $0.90. In other words, the value of the bond has increased by $0.90 from yesterday to today.
Explanation:
We have Value of the bond = Quoted value / 100 * face value
So,
Yesterday value of the bond = 102.16/100 * 3,000 = $3064.8;
Today value of the bond = 102.19/100 * 3,000 = $3065.7.
=> Change in the value of the bond = Today value of the bond - Yesterday value of the bond = $3065.7 - $3064.8 = $0.90.
In other words, the value of the bond has increased by $0.9 from yesterday to today.
Answer:
$101,495.20
Explanation:
The comparable property value with compound interest
The formula for calculating future compound values
FV = PV × (1+r)n
In this case:
PV = 98,500
r =0.3% the interest rate per month
n = 10 compound periods
FV = 98,500 x (1+ 0.3/100)10
=98,500 x (1.003)10
=98,500 x 1.030408
=$101,495.20
