The compound annual return. Introduction: Return is a loss or gain incurred on the investment made by the investors. It is expressed in terms of percentage.

Question

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Answer 1

Question

Chapter 7, Problem 1OR

Summary Introduction

To determine: The compound annual return.

Introduction:

Return is a loss or gain incurred on the investment made by the investors. It is expressed in terms of percentage.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the compound annual return is as follows:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1

Compute the compound annual return:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1=($90$17)13−1=($90$17)0.33333−1=1.7429−1=0.7429 or 74.29%

Hence, the compound annual return is 74.29%.

Summary Introduction

To discuss: The method used to value the shares in year 2013.

Expert Solution

Explanation of Solution

The method used to value the shares in year 2013 is as follows:

Free cash flow valuation model is used to value the shares of the firm without dividend facts. It is because T Company has never paid dividend and they will not pay any dividend in future too. Therefore, free cash flow valuation model is the most suitable to value the firm’s share.

Summary Introduction

To determine: The paid-in-capital recorded in the balance sheet.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the paid-in-capital is as follow:

Paid-in-capital=Number of shares sold×Price per share

Compute the paid-in-capital:

Paid-in-capital=Number of shares sold×Price per share=13.3 milllion×$0.001=$0.0133 milllion

Hence, the paid-in-capital is $0.0133 million.

Summary Introduction

To discuss: Whether the consumer reports review of the Model S boost T Company’s stock due to raise in cash flows or reduction in the risk.

Expert Solution

Explanation of Solution

Determine whether the consumer reports review of the Model S increase T Company’s stock due to raise in cash flows or reduction in the risk:

The Consumer Report review of the Model S can increase T Company’s stock because the review reduces the risk of the company. This Review report minimizes the risk associated with the failure of the products.

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Answer 2

Question

Chapter 7, Problem 1OR

Summary Introduction

To determine: The compound annual return.

Introduction:

Return is a loss or gain incurred on the investment made by the investors. It is expressed in terms of percentage.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the compound annual return is as follows:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1

Compute the compound annual return:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1=($90$17)13−1=($90$17)0.33333−1=1.7429−1=0.7429 or 74.29%

Hence, the compound annual return is 74.29%.

Summary Introduction

To discuss: The method used to value the shares in year 2013.

Expert Solution

Explanation of Solution

The method used to value the shares in year 2013 is as follows:

Free cash flow valuation model is used to value the shares of the firm without dividend facts. It is because T Company has never paid dividend and they will not pay any dividend in future too. Therefore, free cash flow valuation model is the most suitable to value the firm’s share.

Summary Introduction

To determine: The paid-in-capital recorded in the balance sheet.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the paid-in-capital is as follow:

Paid-in-capital=Number of shares sold×Price per share

Compute the paid-in-capital:

Paid-in-capital=Number of shares sold×Price per share=13.3 milllion×$0.001=$0.0133 milllion

Hence, the paid-in-capital is $0.0133 million.

Summary Introduction

To discuss: Whether the consumer reports review of the Model S boost T Company’s stock due to raise in cash flows or reduction in the risk.

Expert Solution

Explanation of Solution

Determine whether the consumer reports review of the Model S increase T Company’s stock due to raise in cash flows or reduction in the risk:

The Consumer Report review of the Model S can increase T Company’s stock because the review reduces the risk of the company. This Review report minimizes the risk associated with the failure of the products.

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Answer 3

Question

Chapter 7, Problem 1OR

Summary Introduction

To determine: The compound annual return.

Introduction:

Return is a loss or gain incurred on the investment made by the investors. It is expressed in terms of percentage.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the compound annual return is as follows:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1

Compute the compound annual return:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1=($90$17)13−1=($90$17)0.33333−1=1.7429−1=0.7429 or 74.29%

Hence, the compound annual return is 74.29%.

Summary Introduction

To discuss: The method used to value the shares in year 2013.

Expert Solution

Explanation of Solution

The method used to value the shares in year 2013 is as follows:

Free cash flow valuation model is used to value the shares of the firm without dividend facts. It is because T Company has never paid dividend and they will not pay any dividend in future too. Therefore, free cash flow valuation model is the most suitable to value the firm’s share.

Summary Introduction

To determine: The paid-in-capital recorded in the balance sheet.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the paid-in-capital is as follow:

Paid-in-capital=Number of shares sold×Price per share

Compute the paid-in-capital:

Paid-in-capital=Number of shares sold×Price per share=13.3 milllion×$0.001=$0.0133 milllion

Hence, the paid-in-capital is $0.0133 million.

Summary Introduction

To discuss: Whether the consumer reports review of the Model S boost T Company’s stock due to raise in cash flows or reduction in the risk.

Expert Solution

Explanation of Solution

Determine whether the consumer reports review of the Model S increase T Company’s stock due to raise in cash flows or reduction in the risk:

The Consumer Report review of the Model S can increase T Company’s stock because the review reduces the risk of the company. This Review report minimizes the risk associated with the failure of the products.

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Answer 4

Question

Chapter 7, Problem 1OR

Summary Introduction

To determine: The compound annual return.

Introduction:

Return is a loss or gain incurred on the investment made by the investors. It is expressed in terms of percentage.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the compound annual return is as follows:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1

Compute the compound annual return:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1=($90$17)13−1=($90$17)0.33333−1=1.7429−1=0.7429 or 74.29%

Hence, the compound annual return is 74.29%.

Summary Introduction

To discuss: The method used to value the shares in year 2013.

Expert Solution

Explanation of Solution

The method used to value the shares in year 2013 is as follows:

Free cash flow valuation model is used to value the shares of the firm without dividend facts. It is because T Company has never paid dividend and they will not pay any dividend in future too. Therefore, free cash flow valuation model is the most suitable to value the firm’s share.

Summary Introduction

To determine: The paid-in-capital recorded in the balance sheet.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the paid-in-capital is as follow:

Paid-in-capital=Number of shares sold×Price per share

Compute the paid-in-capital:

Paid-in-capital=Number of shares sold×Price per share=13.3 milllion×$0.001=$0.0133 milllion

Hence, the paid-in-capital is $0.0133 million.

Summary Introduction

To discuss: Whether the consumer reports review of the Model S boost T Company’s stock due to raise in cash flows or reduction in the risk.

Expert Solution

Explanation of Solution

Determine whether the consumer reports review of the Model S increase T Company’s stock due to raise in cash flows or reduction in the risk:

The Consumer Report review of the Model S can increase T Company’s stock because the review reduces the risk of the company. This Review report minimizes the risk associated with the failure of the products.

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Answer 5

Chapter 7, Problem 1OR

Summary Introduction

To determine: The compound annual return.

Introduction:

Return is a loss or gain incurred on the investment made by the investors. It is expressed in terms of percentage.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the compound annual return is as follows:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1

Compute the compound annual return:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1=($90$17)13−1=($90$17)0.33333−1=1.7429−1=0.7429 or 74.29%

Hence, the compound annual return is 74.29%.

Summary Introduction

To discuss: The method used to value the shares in year 2013.

Expert Solution

Explanation of Solution

The method used to value the shares in year 2013 is as follows:

Free cash flow valuation model is used to value the shares of the firm without dividend facts. It is because T Company has never paid dividend and they will not pay any dividend in future too. Therefore, free cash flow valuation model is the most suitable to value the firm’s share.

Summary Introduction

To determine: The paid-in-capital recorded in the balance sheet.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the paid-in-capital is as follow:

Paid-in-capital=Number of shares sold×Price per share

Compute the paid-in-capital:

Paid-in-capital=Number of shares sold×Price per share=13.3 milllion×$0.001=$0.0133 milllion

Hence, the paid-in-capital is $0.0133 million.

Summary Introduction

To discuss: Whether the consumer reports review of the Model S boost T Company’s stock due to raise in cash flows or reduction in the risk.

Expert Solution

Explanation of Solution

Determine whether the consumer reports review of the Model S increase T Company’s stock due to raise in cash flows or reduction in the risk:

The Consumer Report review of the Model S can increase T Company’s stock because the review reduces the risk of the company. This Review report minimizes the risk associated with the failure of the products.

Answer 6

Chapter 7, Problem 1OR

Summary Introduction

To determine: The compound annual return.

Introduction:

Return is a loss or gain incurred on the investment made by the investors. It is expressed in terms of percentage.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the compound annual return is as follows:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1

Compute the compound annual return:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1=($90$17)13−1=($90$17)0.33333−1=1.7429−1=0.7429 or 74.29%

Hence, the compound annual return is 74.29%.

Answer 7

Chapter 7, Problem 1OR

Summary Introduction

To determine: The compound annual return.

Introduction:

Return is a loss or gain incurred on the investment made by the investors. It is expressed in terms of percentage.

Answer 8

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the compound annual return is as follows:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1

Compute the compound annual return:

Compound annual return=(Amount of increase in share price Initial share price)1Number of years−1=($90$17)13−1=($90$17)0.33333−1=1.7429−1=0.7429 or 74.29%

Hence, the compound annual return is 74.29%.

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Summary Introduction

To discuss: The method used to value the shares in year 2013.

Expert Solution

Explanation of Solution

The method used to value the shares in year 2013 is as follows:

Free cash flow valuation model is used to value the shares of the firm without dividend facts. It is because T Company has never paid dividend and they will not pay any dividend in future too. Therefore, free cash flow valuation model is the most suitable to value the firm’s share.

Answer 13

Summary Introduction

To discuss: The method used to value the shares in year 2013.

Answer 14

Expert Solution

Explanation of Solution

The method used to value the shares in year 2013 is as follows:

Free cash flow valuation model is used to value the shares of the firm without dividend facts. It is because T Company has never paid dividend and they will not pay any dividend in future too. Therefore, free cash flow valuation model is the most suitable to value the firm’s share.

Answer 15

Expert Solution

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Summary Introduction

To determine: The paid-in-capital recorded in the balance sheet.

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the paid-in-capital is as follow:

Paid-in-capital=Number of shares sold×Price per share

Compute the paid-in-capital:

Paid-in-capital=Number of shares sold×Price per share=13.3 milllion×$0.001=$0.0133 milllion

Hence, the paid-in-capital is $0.0133 million.

Answer 19

Summary Introduction

To determine: The paid-in-capital recorded in the balance sheet.

Answer 20

Expert Solution

Explanation of Solution

Given information:

T Company initial price of the share is $17 and its price increase to $90 after three years. The company has sold 13.3 million shares in its IPO with a par value of $0.001 per share.

The formula to compute the paid-in-capital is as follow:

Paid-in-capital=Number of shares sold×Price per share

Compute the paid-in-capital:

Paid-in-capital=Number of shares sold×Price per share=13.3 milllion×$0.001=$0.0133 milllion

Hence, the paid-in-capital is $0.0133 million.

Answer 21

Expert Solution

Answer 22

Expert Solution

Answer 23

Expert Solution

Answer 24

Summary Introduction

To discuss: Whether the consumer reports review of the Model S boost T Company’s stock due to raise in cash flows or reduction in the risk.

Expert Solution

Explanation of Solution

Determine whether the consumer reports review of the Model S increase T Company’s stock due to raise in cash flows or reduction in the risk:

The Consumer Report review of the Model S can increase T Company’s stock because the review reduces the risk of the company. This Review report minimizes the risk associated with the failure of the products.

Answer 25

Summary Introduction

To discuss: Whether the consumer reports review of the Model S boost T Company’s stock due to raise in cash flows or reduction in the risk.

Answer 26

Expert Solution

Explanation of Solution

Determine whether the consumer reports review of the Model S increase T Company’s stock due to raise in cash flows or reduction in the risk:

The Consumer Report review of the Model S can increase T Company’s stock because the review reduces the risk of the company. This Review report minimizes the risk associated with the failure of the products.