24 Jul WHAT ARE THE PRICES OF THE LOW- MEDIUM- AND HIGH-PAYOUT STOCKS?
Ind Show more Suppose that there are just three types of investors with the following tax rates: Individuals Individuals Individuals Individuals Corporations Corporations Corporations Corporations Institutions Institutions Institutions Institutions Dividends 30 % 10 % 0 % Capital gains 10 40 0 Individuals invest a total of $80.9 billion in stock and corporations invest $11.08 billion. The remaining stock is held by the institutions. All three groups simply seek to maximize their after-tax income. These investors can choose from three types of stock offering the following pretax payouts: Low Payout Low Payout Low Payout Low Payout Medium Payout Medium Payout Medium Payout Medium Payout High Payout High Payout High Payout High Payout Dividends $ 8 $ 8 $ 32 Capital gains 18 8 0 These payoffs are expected to persist in perpetuity. The low-payout stocks have a total market value of $100.9 billion the medium-payout stocks have a value of $50.9 billion and the high-payout stocks have a value of $120.9 billion. a. Who are the marginal investors that determine the prices of the stocks? Institutions Individuals Corporations b. Suppose that this marginal group of investors requires a 12% after-tax return. What are the prices of the low- medium- and high-payout stocks? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Price of low-payout stock $ Price of medium-payout stock $ Price of high-payout stock $ c. Calculate the after-tax returns of the three types of stock for each investor group. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Institutions Individuals Corporations Low-payout stock % % % Medium-payout stock % % % High-payout stock % % % d. What are the dollar amounts of the three types of stock held by each investor group? (Leave no cells blank be certain to enter 0 wherever required. Enter your answers in billions rounded to 2 decimal places.) Institutions Individuals Corporations Low-payout stock $ $ $ Medium-payout stock $ $ $ High-payout stock $ $ $ Show less
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.