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.
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:
Compute the compound annual return:
Hence, the compound annual return is 74.29%.
To discuss: The method used to value the shares in year 2013.
Explanation of Solution
The method used to value the shares in year 2013 is as follows:
To determine: The paid-in-capital recorded in the
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:
Compute the paid-in-capital:
Hence, the paid-in-capital is $0.0133 million.
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.
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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Chapter 7 Solutions
Principles of Managerial Finance Custom Edition for Wilmington University, 4/e