Fundamentals of Corporate Finance, Student Value Edition
Fundamentals of Corporate Finance, Student Value Edition
3rd Edition
ISBN: 9780133576863
Author: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Publisher: PEARSON
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Chapter 1, Problem 6P

You are a shareholder in a C corporation. The corporation earns $2.00 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend. Assume the corporate tax rate is 40% and the personal tax rate on (both dividend and non-dividend) income is 30%. How much is left for you after all taxes are paid?

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Scenario three: If a portfolio has a positive investment in every asset, can the expected return on a portfolio be greater than that of every asset in the portfolio? Can it be less than that of every asset in the portfolio? If you answer yes to one of both of these questions, explain and give an example for your answer(s). Please Provide a Reference
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Scenario 2: The homepage for Coca-Cola Company can be found at coca-cola.com Links to an external site.. Locate the most recent annual report, which contains a balance sheet for the company. What is the book value of equity for Coca-Cola? The market value of a company is (# of shares of stock outstanding multiplied by the price per share). This information can be found at www.finance.yahoo.com Links to an external site., using the ticker symbol for Coca-Cola (KO). What is the market value of equity? Which number is more relevant to shareholders – the book value of equity or the market value of equity?
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