Which of the following illustrates a capital gain? An investor earns a 20 return from a savings deposit An investor earns a 20 resturn from abond held until maturity An investor purchase a stock for 30 and then later sell it for 25 an investor purchases a stock for 25 and then later sells it for 30
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Which of the following illustrates a
An investor earns a 20 return from a savings deposit
An investor earns a 20 resturn from abond held until maturity
An investor purchase a stock for 30 and then later sell it for 25
an investor purchases a stock for 25 and then later sells it for 30
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- Show graphically how the capital stock will respond to(i) a permanent increase in output price;(ii) a temporary investment tax credit scheme that rebates a fraction r of the value ofinvestment.Suppose that a firm begins at time t=1 with a capital stock of K(1)= 200,000 and, in addition to replacing any depreciated capital, is planning to invest in new capital at the rate I(t)=50,000t*-3/2 for the forseeable future. Find the planned level of capital stock T years from now. Will this firm’s capital stock grow without bound as T -> ∞ ? Explain using a graph.You are considering a purchase of UnderDog Inc.’s stock, currently available on the NYSE for $105 a share. You have calculated that for this investment the required rate of return is 11.3% and the past dividends were growing in accordance with the GDP growth. The economy is expected to grow 2.0% in the foreseeable future. The latest dividend was $10 per share. 2) What if the GDP growth suddenly increased to 3%?
- Economic investment refers to ________. Question 4 options: A) postponing purchases of goods and services. B) selling a financial asset for a gain. C) buying a financial asset for a gain. D) making new additions to a firm's stock of capital.explain the effects of the risk of investment projects on the capital investment decisions of companies with details.Question: Common stock value – All growth models. Personal Finance Problem. You are evaluating thepotential purchase of a small business currently generating $40,000 of after-tax cash flow. Thecompany has $25,000 of Preferred Stock and $150,000 of debt.(FCF0 = $40,000). On the basis of a review of similar-risk investment opportunities, you must earn arate of return of Common stock value – All growth models. Personal Finance Problem. You are evaluating thepotential purchase of a small business currently generating $40,000 of after-tax cash flow. Thecompany has $25,000 of Preferred Stock and $150,000 of debt.(FCF0 = $40,000). On the basis of a review of similar-risk investment opportunities, you must earn arate of return of 9% on the proposed purchase. Because you are relatively uncertain about future cashflows, you decide to estimate the firm’s common stock value using three possible assumptions aboutthe growth rate of cash flows. 1. What is the firm's value if cash flows are expected…
- A business contemplates building a new manufacturing facility and will need to seek loanable funds of $130 million. It expects that the new facility will yield a 12% return on investment (ROI). Given the current loanable funds market equilibrium depicted in the graph below, is it likely that the firm will borrow the money to build the new facility? Why?Based on the following scenario, what is the NPV of ABC inc.? Expected annual growth: 10.5%, Weighted average cost of capital: 19.9%. Years of cash flow to include: 25 years. Cash flow from operations: $850,000 in total, Cash flow from investing: -$14,750 in total The business NPV is valued at $10,370,130. The business NPV is valued at $7,474,184. The business NPV is valued at $8,818,948. The business NPV is valued at $9,270,043.Daniel is considering selling two stocks that have not fared well over recent years. A friend recently informed Daniel that one of his stocks has a special designation, which allows him to treat a loss up to $54,000 on this stock as an ordinary loss rather than the typical capital loss. Daniel figures that he has a loss of $64,800 on each stock. If Daniel’s marginal tax rate is 35 percent and he has $129,600 of other capital gains (taxed at 15 percent) Required: What is the tax savings from the special tax treatment?
- Which bonds are acceptable for investment? Justify your response with suitable computations. 2. What will be the total cost of investment in bonds? 3. Do the stock and bond investments fall within Stephanie’s investment guidelines? Show appropriate computations in support of your response.Answer True, False or Uncertain. Brieáy explain your answer The rate of return equality is inconsistent with the observations found in the Equity Premium Puzzle.what equation can determine whether a stock or asset is overvalued significantly?