ABC Ltd is currently paying a dividend of $3 per share. If investors expect this dividend to be maintained forever and require a rate of return of 11 percent on the investment. What is the value of each ABC share today?
finance business
Depending upon the circumstances, equity can also be referred to as: A. ordinary shares B. common stock C. risk capital D. shareholders’ funds. E. all of these. 2. Debt financing can be raised by firms in the ________markets. A. money and share B. bond and FX C. share and derivative D. money and bond E. share and FX. 3. An initial public offering: A. does not always raise additional equity funds for the business B. is the initial sale of shares to the public C. is also known as a ‘float’ D. is the process by which shares become listed on the ASX E. all of these. 4. In order to conduct a secondary market for shares, the ASX: A. sets the rules for the admission of companies to the market B. establishes trading and settlement arrangements C. discloses trading information, such as individual share prices D. promotes itself as a market for securities. E. all of these. 5. A difference between ordinary and preference shares is: A. preference dividends are payable only after ordinary dividends have been paid B. preference dividends are tax deductible C. preference dividends are a fixed amount D. ordinary shares are less risky E. preference shares have greater potential for capital gains.
Tax on sculpture
Melanie owns a sculpture that she received as a gift from her Uncle Elmer approximately 12 years ago. Her uncle is an artist and created the sculpture. Melanie has displayed the sculpture in her back yard most of the time, and her neighbor recently offered $25,000 for the sculpture. Discuss the tax issues that she may face in determining if she should accept the offer.
Assets
1. An asset promises to pay $1,000 in each of the next two years. a) What is its present value assuming the one-year rate of discount is 1.5% and the two-year is 2.2%? b) What is its present value assuming both discount rates are 1.85%? 12. An asset promises to pay $60 in each of the next three years. Assume the rate of discount is 5% for each of the years. a) Calculate its price the “long” way; i.e., just as you have been doing for #11 and #12, by discounting each future cash flow and summing. b) Calculate its price using the annuity formula.
trust fund
.You would like to establish a trust fund that would pay annual payments to your heirs of $200,000 a year forever. You expect the trust fund to earn an average return of 7 percent. How much do you need to deposit into this trust fund today to achieve your goal?
bond portfolio
Assume that you manage a bond portfolio. Looking ahead to the next twelve to eighteen months, you expect interest rates to rise fairly significantly. What actions might you take to position your portfolio for this anticipated change in rates?
Finance
Mr. Finance, Inc. announced yesterday that their next annual dividend will be $4 and that future dividends will be increasing by 7 percent annually. How much are you willing to pay for one share of this stock if your required return is 16 percent?
Bama Corp. stock
How much is a share of Bama Corp. stock expected to be worth one year from now, if you pay $50 per share today for this stock, the next dividend will be $6 per share, and your required rate of return on equity investment is 9%?
deploying capital
Question #1: According to the finance theory we have discussed so far in the course, What rule(s) should managers use to decide how to deploy capital? Does this line up with the discussion in the article? Explain why or why not. What are some ways that shareholders can ensure that managerial decisions are made in their best interests? Questions #2: Is it reasonable to conclude from reading the article that firms would achieve higher TSR by making acquisitions or stockpiling cash? Why or why not? What additional information would you need to properly assess the impact on shareholder wealth of the various capital deployment choices described in the article? ARTICLE http://ww2.cfo.com/cash-flow/2013/01/the-envelope-please-the-2012-capital-deployment-awards/
importance of the risk and return balance
JOURNAL Critically reflect on the importance of the risk and return balance. Consider the following: Can we ever have any return without some type of risk? If you take on a large risk, are you guaranteed a large return? Why or why not? What other factors play into risks that are not covered in the video? When have you had to consider risk and return in personal or professional decision-making?