Assume AMP Ltd just paid 100% fully franked dividend of $0.84 per share. The dividend is expected to grow at a constant rate of 5% p.a. and the estimated cost of capital is 10%. Given a corporate tax rate of 30%, what is the present value of one share in AMP Ltd? Present value of one share = $ (to the nearest cent)
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Assume AMP Ltd just paid 100% fully franked dividend of $0.84 per share. The dividend is expected to grow at a constant rate of 5% p.a. and the estimated cost of capital is 10%. Given a corporate tax rate of 30%, what is the present value of one share in AMP Ltd? Present value of one share = $ (to the nearest cent)
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- Napa plc has 100 million £0.25 ordinary shares in issue with a current market value of £1.20 per share. The cost of ordinary shares is estimated at 12 per cent. The business also has 6 per cent irredeemable loan notes in issue with a nominal value of £75 million. These are currently quoted at £80 per £100 nominal value. The tax rate is 20 per cent. What is the weighted average cost of capital of the business?Please show the solution. Thank you. 1. The market value of Bato Company’s ordinary shares (book value: P65M) is estimated at P60M and the market value of its interest bearing debt (book value: P35M) is estimated at P40M. The average before tax yield on these liabilities is 15% per year. Income taxes are 40%. The company is expected to pay a dividend of P10 per share and the shares are selling at a price of P100 per share. The growth rate of dividend is projected to be 2.5% per year. What is the weighted average cost of capital (WACC) of the company as a whole?H. J. Corp.'s common just paid a dividend of $5 for the year. Dividends are expected to grow at a 4% annual rate forever. If H. J.'s current market price is $60, what is the after-tax cost of this firm’s equity? Assume a tax rate of 40%.
- ABC Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently sells for $52.50 a share. The before-tax cost of debt is 7.50% and the tax rate is 40%. The target capital structure consist of debt and 55% common equity. What is the companys WACC if all the equity used is from retained earnings?S Corp. is expected to pay a $2.55 dividend at year end, the dividend is expected to grow at a constant rate of 4.50% a year, and the common stock currently sells for $35 a share. The befoes-tax cost of debt in S and the tax rate is 40%. The target capital structure consists of 60% debt and 40% common equity. What is the company's WACC? Do not round your intermediate calculations. Ⓒa. 8.39% b.9.24 % O c. 6.25 % Od. 6.69% Ⓒ.7.97%S Corp. is expected to pay a $2.55 dividend at year end, the dividend is expected to grow at a constant rate of 4.50% a year, and the common stock currently sells for $35 a share. The before-tax cost of debt is 5.50%, and the tax rate is 40%. The target capital structure consists of 40% debt and 60% common equity. What is the company’s WACC? Do not round your intermediate calculations
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- Maji maji Limited had earnings attributable to ordinary shareholders equal to Ksh. 8,800,000. The firm has 1,100,000 ordinary shares outstanding and a payout policy of 60%. The required rate of return by ordinary shareholders is16%. Required: a) Compute the theoretical value of a share in case of a zero growth firm b) The value of a share if a growth rate of 7% p.a. in perpetuity is expected c) The firm expects a growth rate of 20% p.a. for the first three years, 10% for the next four years and 7% p.a. from year 8 to perpetuity4. Assuming that a company pays income tax @ 40%, calculate the after tax cost of capital in the following cases: a) A preference share sold at Rs. 100 with 9% dividend and redemption price of Rs.120 and Fedemption period of 8 years. b) An ordinary share selling at market price of Rs.120 and current dividend of Rs.9 per share which is expected to grow at 8%.Reingaart Systems is expected to pay a $4.2 dividend at year end (D1 = $4.2), the dividend is expected to grow at a constant rate of 4.1% a year, and the common stock currently sells for $62 a share. The before-tax cost of debt is 8.4%, and the tax rate is 24%. The target capital structure consists of 75% debt and 25% common equity. What is the company's WACC if all equity is from retained earnings? 8.41% O 7.51% 8.11% O 7.81% O 8.71%