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Predict the price of the common stock using models provided

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Predict the price of the common stock using models provided.

a. Discuss differences of actual vs. calculated stock price.

b. If the firm has non-constant growth, then assume a constant growth rate at the end of the second year.

Your new tax return client, Ms. X, had her 2018 tax return audited last year and found the whole experience so painful that she never wants to take a chance on ever having to deal with the IRS again. (She should have hired you to help defend the audit, but didn’t.) Specifically, she lost a very big part of her research tax credit because the IRS reclassified a large category of expenses that she had included in calculating the credit as “not sufficiently research-related.”

As to her 2019 return, you note that Ms. X has even more expenses in that same category, meaning that her tax credit would be much larger if they were included in the calculation. And, more importantly, you’re aware that a Tax Court decision from earlier this year held, in another taxpayer’s almost identical circumstances, that the very same category of expenses was properly included in the research credit calculation. Can you, or should you, advise Ms. X that her own expenses in this same category can be used to her benefit in calculating her 2019 research credit even though they were specifically rejected on audit of her 2018 return?