ECON 4400 Lecture Notes - Dividend Yield, Ratia, Volvo B4B Engine

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18 Jun 2014

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To find the net income, we need to find the eps. The stock quote tells us the p/e ratio for the stock is 10. 21. Since we know the stock price as well, we can use the p/e ratio to solve for eps as follows: P/e = 10. 21 = stock price / eps = $ / eps. We know that eps is just the total net income divided by the number of shares outstanding, so: Eps = ni / shares = . 299 = ni / 232,455. Ni = . 30(232,455) = ,646. 50: (lo1) we can use the two-stage dividend growth model for this problem, which is: P0 = [. 25(1. 28)/(. 13 . 28)][1 (1. 28/1. 13)8] + [(1. 28)/(1. 13)]8[. 25(1. 06)/(. 13 . 06)] P0 = . 55: (lo1) we can use the two-stage dividend growth model for this problem, which is: P0 = [d0(1 + g1)/(r g1)]{1 [(1 + g1)/(1 + r)]t}+ [(1 + g1)/(1 + r)]t[d0(1 + g2)/(r g2)] P0 = [. 74(1. 25)/(. 12 . 25)][1 (1. 25/1. 12)11] + [(1. 25)/(1. 12)]11[. 74(1. 06)/(. 12 . 06)]

Related Questions

1.Consider the following four debt securities, which areidentical in every characteristic except as noted:
?W: A corporate bond rated AAA
?X: A corporate bond rate BBB
?Y: A corporate bond rated AAA with a shorter time to maturity thanbonds W and X
?Z: A corporate bond rated AAA with the same time to maturity asbond Y that trades in a more liquid market than bonds W, X, orY
List the bonds in the most likely order of the interest rates(yields to maturity) of the bonds from highest to lowest. Explainyour work.

2.Explain how an economist could use the slope of the yield curveto analyze the probability that a recession will occur and why thespread may matter.
3.One year ago, you bought a bond for $10,000. You receivedinterest of $400 at the end of the year, as well as your $10,000principal. If the inflation rate over the last year was fivepercent, calculate the real return. Show your work.
4.Suppose that the price of a stock is $50 at the beginning of ayear and $53 at the end of the year, and it pays a dividend of $2during the year. Calculate the stockâs current yield, capital-gainsyield, and the return. Show your work for three separatecalculations.
5.Use the capital-asset pricing model to predict the returns nextyear of the following stocks, if you expect the return to holdingstocks to be 12 percent on average, and the interest rate onthree-month T-bills will be two percent. Calculate a stock with abeta of -0.3, 0.7, and 1.6. Show your work for three separatecalculations.

goldcod670

Henry told us in his guide to the Institutional Framework of Taxation in Australia that the Australian Taxation System is one of the most complex in the world and is made up of approximately 125 taxes including taxes such as Income Tax, Capital Gains Tax, Fringe Benefits Tax and Goods and Services Tax just to name a few. He also mentioned that there are many different organisations that play different and varied roles within this system to ensure its integrity and all Australians are equally treated with equity.
The Australian Taxation System is embedded in the way of life for all Australian taxpayers, we pay tax on our income, we pay tax when we purchase goods and use services, we pay tax when we sell assets and this is just to name a few but in return the Government provides services and benefits e.g. hospitals, schools, defence, and financial assistance to those in need etc.
As we know the government relies very heavily on the revenue from taxation to be able to finance its activities and services it offers to the public and reforms on taxation are often a focus of governments. An area of taxation reform that is constantly under review is a rise in the current GST rate or broaden the GST base (e.g. make basic foods taxable). Many feel that this would solve some of the governmentâs financial woes, whilst other are adamantly against any rise or broaden of the tax base. This is a very political issue and is extremely topical as the government, opposition and the premiers of the Australian States/Terrorities are engaged in heated debates regarding the issue of GST and its possible reform.
The assessment requires you to review this topical area of taxation (GST Reform).

Some views may be that it is not unreasonable to raise the GST rate as compared to other OECD countries the Australian rate is very low, that broadening the tax base will make GST a simpler tax remembering that businesses are responsible for its collection and a more simply system will lessen their burden. Others may view it as that the GST rate should not be raised or the base broaden as it will cause more financial stress on some areas of the public, it may be the view that it is too much of a problem politically for a government to introduce changes to GST especially as we head into an election year â¦.. WHAT WILL YOUR VIEW BE?
The requirements of the assignment for part two is to produce a 1000 to 1500 word essay on your opinion of this topic

MULTIPLE CHOICE QUESTIONS:

Note: Price elasticity of demand is given as an absolute value throughout.

The production possibility frontiers for Arboc and Arbez are shown below. Use this information for the next nine questions.

1. Which of the following is most likely to shift out the Arbocali production possibility frontier?
A. An increase in the general educational level of the Arbocali labor force.
B. An increase in the income of Arbocali consumers.
C. An increase in the purchase of stocks on the Arbocali Stock Exchange.
D. A reallocation of resources toward consumer goods.

2. If the Arbocali economy moves from Point A to Point B, the opportunity cost would be
A. 30 consumer goods.
B. 20 capital goods.
C. 40 capital goods.
D. 10 consumer goods.

3. If the Arbocali economy moved from Point A to Point B, we would expect
A. a decreased standard of living in the future as consumption has decreased.
B. increased unemployment in the future.
C. decreased unemployment in the future.
D. the economy to grow more rapidly in the future

4. Arbez is currently producing 25 consumer goods and 60 capital goods. If Arbez increases capital good production to 75, the opportunity cost will be
A. 15 consumer goods.
B. 0 consumer goods.
C. 5 consumer goods.
D. 10 consumer goods.

5. Both Arboc and Arbez are producing 30 consumer goods and each is on its production possibility frontier. We can conclude that
A. Both economies will grow equally rapidly.
B. Arboc will grow more rapidly than Arbez.
C. Arbez will grow more rapidly than Arboc.
D. Arboc is currently experiencing a higher rate of unemployment than Arbez.

6. Arbez becomes able to increase its maximum output of consumer goods. This indicates that the opportunity cost of consumer goods in Arbez has
A. decreased and the opportunity cost of capital goods has remained unchanged.
B. increased and the opportunity cost of capital goods has decreased.
C. increased and the opportunity cost of capital goods has remained unchanged.
D. decreased and the opportunity cost of capital goods has increased.

7. Arbez

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ECON 4400 Lecture Notes - Dividend Yield, Ratia, Volvo B4B Engine

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