Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You wish to earn a rate of return of 13% on each of two shares, A and B. Share A is expected to pay a

image text in transcribed
image text in transcribed
You wish to earn a rate of return of 13% on each of two shares, A and B. Share A is expected to pay a dividend of $3 in the upcoming year while Share B is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of Share A is 7% while the growth rate for Share B is only 5%. The current intrinsic value of Share A: (a) will be greater than the current stock price of Share B. (b) will be the same as the current stock price of Share B. (c) will be less than the current stock price of Share B. (d) cannot be determined because more information is required about subsequent dividends for Share A and Share B in order to answer this question. ABC Pty Ltd sells upmarket washing machines. It had $200,000 stock on hand at the beginning of the 2017/2018 financial year. It purchased $50,000 of additional trading stock during the income year. The closing stock on hand was $130,000. At the beginning of the 2018/2019 financial year ABC Pty Ltd had $130,000 stock on hand. It did not purchase any stock during the year as it was having financial difficulties. In fact, in September 2018 ABC gave two washing machines to a creditor as payment in full of the debt it owed to that creditor (ABC owed the creditor $2,000). Each washing machine had cost ABC $1,000 and ABC would usually sell each washing machine for $1,750 ABC did not sell any stock during the 2018/2019 financial year. Towards the end of that year, a flood swept through the warehouse and all stock was destroyed. ABC did not purchase any replacement stock. Required:Advise ABC of the tax implications for each of the 2017/2018 and 2018/2019 financial years based on the information above. Where appropriate, support your answer with legislative authority. 20 marks (Click or tap here to enter text

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Successful Fundraising For Arts And Cultural Organizations

Authors: Carolyn S. Friedman, Karen B. Hopkins

2nd Edition

1573560294, 978-1573560290

More Books

Students also viewed these Finance questions

Question

What is topology? Explain with examples

Answered: 1 week ago

Question

an element of formality in the workplace between different levels;

Answered: 1 week ago