Morty Seinfeld owns 100 shares in a tobacco company called Tarbox. Morty brags about its steady, annual dividend of $1.25 per share. You are jealous of the dividend but philosophically opposed to "sin" companies, so you can't buy the stock
Instead, you have identified the Paper Street Soap Factory (PSSF) which is developing a new biodegradable bath soap. The company plans to begin paying an annual dividend of $1.25 starting in three years. Stockholder in both companies require a return of 8%. A stock price and dividend forecast for the two companies is provided in the table. (Assume that dividends are paid in perpetuity.) Your plan is to buy shares in PSSF today, sell some at Year 1, some at Year 2 and then hold the remainder in perpetuity. How many shares do you have to buy today in order to earn the same annual income as Morty?
Tarbox PSSF
Year Price Dividend Price Dividend
0 15.625 13.39592
1 15.625 1.25 14.46759 0
2 15.625 1.25 15.625 0
3 15.625 1.25 15.625 1.25
4 15.625 1.25 15.625 1.25
A) 100.00
B) 108.00
C) 108.64
D) 116.00
E) 116.64
E
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The Consumer Credit Protection Act is primarily concerned with which area of marketing?
A) promotion B) product C) distribution D) price E) competition
All other factors equal, a decrease in the order quantity will
a. decrease the annual carrying costs. b. decrease the annual ordering costs. c. increase the lead time. d. reduce the safety stock.
The purpose of marketing control is
a. determine what the mission statement should be b. minimize the riskiness of the behaviors being promoted c. detect deviations from the goal and correct them d. adjust the goals that are being targeted e. provide a mechanism for the marketer to protect his or her job
Which of the following statements is most likely true if Red Inc has an operating leverage of 2.0 while Blue Corp has an operating leverage of 1.4?
A) Red Inc. is selling its products for a higher sales price than Blue Corp. B) Red Inc.'s net operating income will be less sensitive to a change in sale volume than Blue Corp. C) Blue Corp.'s fixed costs in relation to variable costs are lower than Red Inc.'s. D) Blue Corp. has a lower contribution margin per unit than Red Inc.