One of your friends picks up the Wall Street Journal and starts choking on his decaf skinny mochaccino latte. "Look at this!" he gasps. "Amazon pays no dividends and has a market value of $828 billion. Yet, General Motors pays a dividend of 0.38 dollar per share and a market value of only $54 billion. How can this be?!" Explain to your friend how this is possible.

One of your friends picks up the Wall Street Journal and starts choking on his decaf skinny mochaccino latte. "Look at this!" he gasps. "Amazon pays no dividends and has a market value of $828 billion. Yet, General Motors pays a dividend of 0.38 dollar per share and a market value of only $54 billion. How can this be?!" Explain to your friend how this is possible.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter16: Property Transactions: Capital Gains And Losses

Section: Chapter Questions

Problem 23P

See similar textbooks

Similar questions

Bruce buys $9,000 of Sketchy Corporation stock. Unfortunately, a major newspaper reveals the very next day that the company is being investigated for accounting fraud, and the stock price falls by 62%. What is the percentage increase now required for the value of Bruce's stock to get back to what he paid for it?
Due to the recent outbreak of the COVID-19 pandemic, the operations of many MNCs weredisrupted. One of your friends makes the following statement: “Globalisation is dead! Why areyou wasting your time studying international finance?”.a) How would you respond to her? Please note that your friend is not a business graduate anddoes NOT understand the terminology of business/economics/finance. Therefore, explain why she is wrong (or right). For this part
7. Would you lie to save your Company? “I’m at my board meeting,” begins the CEO of a $20 million toy manufacturer, “and I get this fax from our largest customer saying that our Rupert the Robot, our biggest seller, was self-destructing. The customer said that it was considering removing all Ruperts from the shelf and returning them to us. “Within a couple of hours,” he continues, “I get another call saying that another major customer stated the same problem. Then an hour later, another call. And then another. In all, our biggest selling product would be returned by our major customers. If we have to refund money to our customers for returns, we would be facing a $40 million loss. Put delicately, the company would be ruined.” For us as a business, returns of this magnitude would have been the end. The CEO could imagine only what might happen once word of this reached all of his lenders. “I had short-term loans with about eight banks for an amount of money equal to my equity in the…
Everybody knew Ed McAlister was a brilliant businessman. He had taken a small garbage collection company in Kentucky and built it up to be one of the largest and most profitable waste management companies in the Midwest. But when he was convicted of a massive financial fraud, what surprised everyone was how crude and simple the scheme was. To keep the earnings up and the stock prices soaring, he and his co-workers came up with an almost foolishly simple scheme: First, they doubled the useful lives of the dumpsters. That allowed them to cut depreciation expense in half. The following year, they simply increased the estimated salvage value of the dumpsters, allowing them to further reduce depreciation expense. With thousands of dumpsters spread over 14 states, these simple adjustments gave the company an enormous boost to the bottom line. When it all came tumbling down, McAlister had to sell everything he owned to pay for his legal costs and was left with nothing. Requirements If an…
Suppose you were a CPA and you had invested in IBM when IBM was not one of your firm's clients. Two years later, after IBM's stock price had fallen considerably, your firm won the IBM audit contract. You will be involved in working with the IBM audit. You know that your firm's rules require that you sell your shares immediately. If you do sell immediately, you will sustain a large loss. Do you think this is fair? What would you do?
Warren Buffet once said, “I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.” Would you agree with Warren’s advice? Write a short (6-8 sentence response
"We must get it," Erickson Santos, president of Industrial Fasteners, roared. "Without it, we're in big trouble." The "it" Mr. Santos referred to is the renewal of a $20 million loan with Manila First Bank. The big trouble he fears is the lack of funds necessary to repay the existing debt and few, if any, prospects for raising the funds elsewhere. Mr. Santos had just hung up the phone after a conversation with a bank vice-president in which it was made clear that this year's statement of cash flows must look better than last year's. Mr. Santos knows that improvements are not on course to happen. In fact, cash flow projections were dismal. Later that day, Timothy Dela Cruz, assistant controller, was summoned to Mr. Santos's office. "Dela Cruz," Santos barked, "I've looked at our accounts receivable. I think we can generate quite a bit of cash by selling or factoring most of those receivables. I know it will cost us more than if we collect them ourselves, but it sure will make our cash…
Bernie Ebbers, the CEO of WorldCom, a major telecommunications company, was having personal financial troubles. Ebbers pledged a large stake of his WorldCom stock as security for some personal loans. As the price of WorldCom stock sank, Ebbers’s bankers threatened to sell his stock in order to protect their loans. To avoid having his stock sold, Ebbersasked the board of directors of WorldCom to loan him nearly $400 million of corporate assets at 2.5% interest to pay off his bankers. The board agreed to lend him the money.Comment on the decision of the board of directors in this situation.
Suppose that Ike is loss averse. In the morning, Ike’s stockbroker calls to tell him that he has gained $1,000 on his stock portfolio. In the evening, his accountant calls to tell him that he owes an extra $1,000 in taxes. At the end of the day, does Ike feel emotionally neutral since the dollar value of the gain in his stock portfolio exactly offsets the amount of extra taxes he has to pay? Explain.
Due to the recent outbreak of the COVID-19 pandemic, the operations of many MNCs weredisrupted. One of your friends makes the following statement: “Globalisation is dead! Why areyou wasting your time studying international finance?”. Fascinated by your friend’s question, you decide to conduct internet research on the topic.You may search internet sources including journals, newspapers and finance/economicsrelated think tanks and publications. Based on your research write a report addressing thefollowing issues:(i) impact of COVID-19 on international trade(ii) impact of COVID-19 on businesses (think revenues, cash flows)(iii) impact of COVID-19 on financial markets(iv) challenges faced by finance managers due to COVID-19A good report will be organized well using headings for the sub-topics. Your report shouldreflect the quality of research undertaken by you. Further, you must cite all sources used inyour report using Harvard system of referencing. The upper limit for the report is 750…
You are the Director of Finance at BlueKay Enterprises. You barely had enough time to eat your breakfast sandwich when the VP of Finance (your boss) calls you in for an emergency meeting. He tells you that your company has entered a contract to sell 20 Trucks to RedDox ( @ $12,000 USD per Truck), An American company based out of Massachusetts. Your boss is extremely concerned about the foreign exchange risk related to this contract. Bluekay Enterprise is a Canadian Controlled Private Corporation that does all its transaction & reporting in Canadian dollars. Your boss tells you that the Trucks are to be delivered in 180 days, and the payment will be received immediately thereafter. You recommend Bluekay Enterprises
Penco Ltd’s board of directors are looking into expanding the company’s business operations. Before investing in a new product, the board conducted one focus group, and based on this one bit of feedback, invested $5m of company funds to develop the product. Within two years, the company had lost $8m due to poor sales. Shareholders are furious and wish to hold directors personally liable for this loss. Analyse the likely outcome for directors if shareholders were to accuse the board of breaching CA s 180.