Question: a) (10 marks) You own 100 sh that will pay 5$ in one yr and 15$ in 2yrs. Calculate the current value of your shares

a) (10 marks) You own 100 sh that will pay 5$ in one yr and 15$ in 2yrs. Calculate the current value of your shares if the discount rate is 12% pa. You would prefer equal dividends in both years. Calculate the size of the dividend and detail the actions you would take. Show that the value of your shares has not changed. b) (5 marks) Calculate the % cost of not taking the discount when credit terms are 3/10 net 60. What is the % cost if you stretch the payment to 90 days? What are the disadvantages of stretching?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

During the month of May 20--, The General's Favorite Fishing Hole engaged in the following transactions. These transactions required an expansion of the chart of accounts as shown below. May 1 In...

Q:

a) (10 marks) You own 100 sh that will pay 5$ in one yr and 15$ in 2yrs. Calculate the current value of your shares if the discount rate is 12% pa. You would prefer equal dividends in both years....

Q:

a) (10 marks) You own 100 sh that will pay 5$ in one yr and 15$ in 2yrs. Calculate the current value of your shares if the discount rate is 12% pa. You would prefer equal dividends in both years....

Q:

You own 100 sh that will pay 5$ in one yr and 15$ in 2yrs. Calculate the current value of your shares if the discount rate is 12% pa. You would prefer equal dividends in both years. Calculate the...

Q:

You own 100 sh that will pay 5$ in one yr and 15$ in 2yrs. Calculate the current value of your shares if the discount rate is 12% pa. You would prefer equal dividends in both years. Calculate the...

Q:

Assignment - An Individual Assignment Use the assumptions, ratios and data provided to develop a forecast of the company financial statements for the next five 1 years (2019 to 2023) after preparing...

Q:

I need the solution forexsercise 33 - 38 on chapter 9of corporate financeas the attached file. pls do and send to my e..8@gmail.com Chapter 9 Stock Valuation 299 9. Corporate Ethics Is it unfair or...

Q:

What would be the company's(Wm. Wrigley Jr.) WACC after the proposed leverage recapitalization if it could maintain "BBB" debt rating (using 20-year treasury yield as the risk-free rate and new beta...

Q:

"Solve the following, show the steps for the final answer. 1. You have an opportunity to buy a $1,000 bond which matures in 10 years. The bond pays $30 every six months. The current market interest...

Q:

"Solve the following, show the steps for the final answer. 1. You have an opportunity to buy a $1,000 bond which matures in 10 years. The bond pays $30 every six months. The current market interest...

Q:

"Solve the following, show the steps for the final answer. 1. You have an opportunity to buy a $1,000 bond which matures in 10 years. The bond pays $30 every six months. The current market interest...

Q:

For this workshop we will be using Google?s merchandise store as our analytics website. This is because Google provides free demo usage of Google Analytics on this particular website. Using an...

Q:

Two tasks A and B need to perform the same amount of work. However, task A has higher priority, and needs to be given more CPU time. Expain how will this be achieved in each of the Linux schedulers...

Q:

Parte 1 : Encuentre un art culo de investigaci n reciente en una revista revisada por pares ( publicada en los ltimos 5 a os ) sobre uno de los temas de los cap tulos 1 2 y 1 3 ( metacognici n ,...

Q:

Enos Printing Corp. uses a job order cost system. The following data summarize the operations related to the first quarters production. 1. Materials purchased on account $192,000, and factory wages...

Q:

Sales budget data for Paige Company are given in BE23-2. Management desires to have an ending finished goods inventory equal to 25% of the next quarters expected unit sales. Prepare a production...

Q:

Sales budget data for Palermo Company are given in BE9-2. Management desires to have an ending finished goods inventory equal to 25% of the next quarters expected unit sales. Prepare a production...

Q:

Aruba Inc. reported the following partial income statement data for the years ended December 31, 2018, and 2017: ____________________2018_________2017...

Q:

Calabogie Camera Shop Ltd. reports the following cost and net realizable value information for its inventory at December 31: Instructions (a) Determine the lower of cost and net realizable value of...

Q:

Please read carefully. Bp Texas City* When British Petroleums (BP) Horizon oil rig exploded in the Gulf of Mexico in 2010, it triggered tragic reminders for experts in the safety community. In March...

Q:

Identify examples of mind reading, and describe their impact on Marthas and Andys discussion.

Q:

Attend a meeting of a political or civic group that interests you. Take notes on climate-building communication. For instance, do people at the meeting express empathy, openness, spontaneity, and so...

Q:

To what extent do you think Andy and Martha feel listened to by the other?