Nora07

20.01.2020 • 

Business

Which of the following choices concerning the recognition of interest income for corporate bond are correct? (check all that apply.)

a.if bonds were issued at a premium, taxpayers must amortize the premium over the life of the bond resulting in an increase in interest income.
b.if bonds were issued at a discount, special original issue discount rules apply.
c.if bonds are purchased at a premium in the secondary market, the premium can be amortized or added to the basis of the bond.
d.if bonds are purchased at a discount in the secondary market, the discount is amortized over the remaining life of the bond.
e.the actual interest payments received are included in gross income.

Ответ:

naomirice24

30.01.2021

Business

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$28.57

Explanation:

Current price = D1/(Required return-Growth rate)

D1 (Next dividend) = $2

Required return = 10% = 0.1

Growth rate = 3% = 0.03

Current price = $2/(0.1-0.03)

Current price = $2 / 0.07

Current price = $28.57143

Current price = $28.57

Hence, i will be willing to pay $28.57 for a share of Merck stock.

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