This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Worldwide Inc, a large conglomerate, has decided to acquire another firm. Analysts are ... (Read 24 times)

mynx

  • Hero Member
  • *****
  • Posts: 555
on: Jul 10, 2018
Worldwide Inc, a large conglomerate, has decided to acquire another firm.
 
  Analysts are forecasting a period (2 years) of extraordinary growth (20), followed by another 2 years of unusual growth (10 ), and finally a normal (sustainable) growth rate of 6 annually. If the last dividend was D(0 ) = 1.00 per share and the required rate is 8, what should the market price be today?
  A) 93.70
  B) 72.76
  C) 99.66
  D) 98.57
  E) 68.87

Question 2

You have a choice between investing in a corporate bond or a municipal bond. The corporate bond has an
  annual yield of 10 percent, while the municipal bond has an annual yield of 7 percent.
 
  At what tax rate would
  you be indifferent between buying the corporate bond or the municipal bond?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

bubulittle310@msn.cn

  • Sr. Member
  • ****
  • Posts: 281
Reply #1 on: Jul 10, 2018
Answer to Question 1

B

Answer to Question 2

Before-tax equivalent yield on municipal bond = .07 (1 - tax rate)
Before-tax yield on corporate bond = .10
.10 = .07 : Tax Rate = 1 - (.07/.


mynx

  • Member
  • Posts: 555
Reply 2 on: Jul 10, 2018
YES! Correct, THANKS for helping me on my review

cam1229

  • Member
  • Posts: 329
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

The cure for trichomoniasis is easy as long as the patient does not drink alcoholic beverages for 24 hours. Just a single dose of medication is needed to rid the body of the disease. However, without proper precautions, an individual may contract the disease repeatedly. In fact, most people develop trichomoniasis again within three months of their last treatment.

Did you know?

More than 50% of American adults have oral herpes, which is commonly known as "cold sores" or "fever blisters." The herpes virus can be active on the skin surface without showing any signs or causing any symptoms.

Did you know?

The eye muscles are the most active muscles in the whole body. The external muscles that move the eyes are the strongest muscles in the human body for the job they have to do. They are 100 times more powerful than they need to be.

Did you know?

IgA antibodies protect body surfaces exposed to outside foreign substances. IgG antibodies are found in all body fluids. IgM antibodies are the first type of antibody made in response to an infection. IgE antibody levels are often high in people with allergies. IgD antibodies are found in tissues lining the abdomen and chest.

Did you know?

Your skin wrinkles if you stay in the bathtub a long time because the outermost layer of skin (which consists of dead keratin) swells when it absorbs water. It is tightly attached to the skin below it, so it compensates for the increased area by wrinkling. This happens to the hands and feet because they have the thickest layer of dead keratin cells.

Photograph of a brain specimen with a large malignant tumor. Photograph of a brain specimen with a large malignant tumor.
Large intestine Large intestine
The skulls of living haplorhines differ from those of strepsirhines by having large brains, an enclo The skulls of living haplorhines differ from those of strepsirhines by having large brains, an enclo
HIV Population Worldwide HIV Population Worldwide
Frederick Douglass, having escaped from slavery in 1836, attracted large audiences as an antislavery Frederick Douglass, having escaped from slavery in 1836, attracted large audiences as an antislavery
Venn diagram representation of 17,067 medium and large clusters of protein Venn diagram representation of 17,067 medium and large clusters of protein
Video: Mitosis step-by-step

For a complete list of videos, visit our video library