The par value of stock refers to its value on the open market
Indicate whether the statement is true or false
F
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Which of the following statements is true?
a. Salaried employees are always exempt from FLSA, but wage earners are not; b. An independent contractor is an employee of more than one company; c. To determine the hourly rate of a salaried employee, it is necessary to annualize the monthly salary first; d. A withholding allowance determines the amount to be withheld for FICA; e. When accounting for wages, the Wages and Salaries Expense account should be debited for the net pay
The property interest conveyed to the tenant is called the fee simple estate.
Answer the following statement true (T) or false (F)
Green Planet, Inc., a manufacturer of air filter systems for industrial facilities, is considering the addition of a new system to its current product line. The following data has been forecasted:
1. The market value of the firm’s debt is $300,000, and it has $150,000 in marketable securities. The company also has 10,000 shares of preferred stock that pay an annual dividend of $0.75 per share. Investors require a rate of return of 7% on preferred stocks of similar risk. The firm has 100,000 shares of common stock outstanding, and its weighted average cost of capital is 12%. The expected tax rate is 35% in the next two years and 40% after that.
a) Calculate the free cash flow for each of the next four years.
b) After 2021 the firm’s free cash flow is expected to grow at 5% per year indefinitely. What is the value of the stock today?
c) Assume that after 2021 the firm’s free cash flow is expected to grow at 9% per year for four years. After that time, the firm’s free cash flow will grow at 5% indefinitely. Using the two-stage dividend growth model, what is the value of the stock? Calculate your solution twice, first using equation 9-5 on page 260 and then using the FAME_TwoStageValue user-defined function.
e) Assume that the transition between 9% and 5% will be gradual rather than instantaneous. The forecasted transition period is 3 years. Using the H Model, what is the value of the stock? Calculate your solution twice, first using equation 9-8 on page 264 and then using the FAME_HModelValue user-defined function.
A ______ format allows you to divide your subject into groups or major categories.
a. topical b. spatial c. cause and effect d. chronological