9.

.docx
School
University of New South Wales **We aren't endorsed by this school
Course
FINS 2618
Subject
Finance
Date
Oct 17, 2023
Pages
3
Uploaded by BrigadierResolve8418 on coursehero.com
- Franking credit: credit you have in ATO → Credit you have in the dividend - You offset the franking credit as you already have it in the ATO - Eliminate double taxation → only pay your marginal tax rate - Sometimes business is overseas and hasnt paid full tax in australia = hardly no credit in ATO → called partly franked Partly franked Calculation of tax payable: dividend received (70% partly franked) $12 700.00 plus franking credit [($12700 x 0.7) x 0.3/0.7] $3 810.00 income included in tax return $16 510.00 tax liability ($16510 x 39%) $6 438.90 less franking credit paid by company $3 810.00 Tax payable $2 628.90 FULLY FRANKED 12700 x 3/7 = $5542.86 $18142.86 $7075.71 (minus) -$5542.86 $1632.85 - if result is positive = they owe you - if result is negative = you owe them - EG) P/E: Company A P/E is 5, while Company B P/E is 20 - Shows that it takes 5 years to take back the principle compared to 20 years - Company A is better = cheaper
- Higher P/E ratio = - Compare P/E of banks 0.10(1.07) / (0.12-0.07) = $2.14 0.23(1.04) / (0.17 - 0.04) = $1.84 FOR NEXT DIVIDEND: D1 / (rs - g) 14 3.33(2.82 - 2.60) / 4.33 = 0.7333 / 4.3333 = 16.92 (a) Theorterical ex-rights share price 28.20 → 10 shares (2.8 x 10) 7.8 → 3 shares (2.6 x 3) 36 → market value of 13 shares (28.20 + 7.8) THEREFORE : 2.77 → (36 / 13)
- BAD SIGNAL =
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