Ms. Janet McInish works as an elementary school teacher and has a taxable income from her job of $35,000. She inherited 10% of Golden Cup shares outstanding, and recently received her annual dividends.

a- What is the amount of annual dividends received by Ms. McInish?

Solution:

b- What is Ms. McInish total tax liability if her tax status is (married filing together? (hint, you can find the personal income tax rates on the following web page: https://taxfoundation.org/2019-tax-brackets/

Ms. Janet McInish is currently considering selling her stock ownership. She strongly believes that the share is overpriced and is going to experience a price drop soon. In order to better understand the current situation of Golden Cup stock, she was advised to use the price earnings ratio. Giving that the total market value of Ms. Janet Golden Cup's shares is $120,000.

a- If Ms. Janet believes that any stock that has a P/E ratio that is more than 20% of the industry average to be overpriced, do you recommend Ms. Janet to sell her shares knowing that industry average P/E ratio is 10? Show your calculations as well as your recommendation.