Natsam Corporation has $268 million of excess cash. The firm has no debt and 481 million shares outstanding with a current market price of $12 per share. Natsam's board has decided to pay out this cash as a one-time dividend. a. What is the ex-dividend price of a share in a perfect capital market? b. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete? c. In a perfect capital market, which policy in part (a) or (b) makes investors in the firm better off?
Q: A full-time worker aged 25 invests $250 a month in a fund which has an average yearly return of 8.4%...
A: Compound interest is the investment method where the interest earned in one period is reinvested, wh...
Q: a. Calculate the yield on the repo if it has a 5-day maturity. b. Calculate the yield on the repo if...
A: Repurchase Agreement: A repurchase agreement is also known as 'repo' is a short-term agreement to s...
Q: Consider an FI with the following off-balance-sheet items: A two-year loan commitment with a face va...
A: Credit equivalent amount is referred to as the total of all the items which falls under off-balance ...
Q: You are getting into a business and want to take a loan. The bank requires that you show them your ...
A: Tax Rate = 36% Selling Price = 6kshs No. of units = 100,000 Time Period = 5 Years
Q: Jennifer has just finished high school and is deciding whether to start working or go to college. Sh...
A:
Q: Determine the present value in year zero of a gradient series that begins with a cash flow of $7,000...
A: Interest rate = 8% Cash flow in year 5 = $7000 Annual increase in cash flow = 8%
Q: List and briefly define the five risk-management strategies that are available.
A: The risk management strategies refers to the various methods to treat or manage the risk. The follow...
Q: Bank can be a source of short-term funding in terms of credit card applications. These fundings on c...
A: Credit cards are issued by banks to individuals with good credit score. The individual to whom the c...
Q: What is the implication of a tax invoice not being received for the light fittings
A: Goods and services tax is referred as the tax on the products and services, which is sold for the do...
Q: A corporation cannot survive if the original owners are the only ones to invest in terms of equty fi...
A: Equity financing is the method of getting capital in exchange for partial ownership of the company. ...
Q: Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15%, pay...
A: In order to calculate the amount of interest, we are required to multiply the loan amount with the p...
Q: n of P 2,000.00 was made at 8% simple interest. How long would it take in years for the amount of th...
A: Simple interest is interest without compounding that means no interest on interest and only interest...
Q: On April 2, 2020, shortly after the $7.5 million deposit outflow, Key Bank had borrowed the needed f...
A: Net interest margin in simple words refers to interest earned by the bank on loan given excluding in...
Q: 12.000$ loan is being repaid by installments of 700$ at the end of each mont for as long as necessar...
A: For loans, outstanding balance refers to amount which is payable towards lender at a given point of ...
Q: 6.4 Differentiate between Different Types of Consumer Lender Loan products Significant features They...
A: A commercial bank is a type of financial institution that conducts all public deposit and withdrawal...
Q: Bill Clinton reportedly was paid an advance of $10.0 million to write his book My Life. Suppose the ...
A: NPV is the net present value of an option. It is the difference between the present value of cash in...
Q: A firm's stock is selling at 15 pesos. They just paid a 2 peso peso dividend and are expected to gro...
A: Capital gains yield: Capital gains yield measures the gain or loss with the difference between the p...
Q: A friend asks to borrow $47 from you and in return will pay you $50 in one year. If your bank is off...
A: The present value of money is the discounted value of future cash flows. The future value is the val...
Q: Suppose you created a two-stock portfolio by investing $50,000 in High Tech and $50.000 in Collectio...
A: To Find: Portfolio expected return Standard deviation of portfolio Sharpe ratio CoV
Q: How much dividend was paid in year 2019? How much dividend was received by each share of stock in 20...
A: Stockholders' Equity Ending balance = Beginning balance + Net income - Dividend paid
Q: North American location known for its high temperature ocean surface and its much lower ocean temper...
A: Before investing in new projects or assets, profitability of the project is evaluated on the basis o...
Q: Martha bought a home in 1988 at a cost of $100, 000.00. She put 20% down and financed the remainder ...
A: Equity and debt are two sources to raise the funds to meet the financial requirements. Equity shows ...
Q: A bond with a principal of $1,000 O a. will sell for the market determined price. O b. will always s...
A: Bonds are corporate debt units that are issued by firms and securitized as tradeable assets. A bond ...
Q: Henley Corporation has bonds on the market with 16 years to maturity, a YTM of 10.5 percent, a par v...
A:
Q: Given data: Sales $2,000.000 OpCap $1,120,000 Wacc 9% ...
A: Here,
Q: In a regression of the single-index model, the R-square is 66%, residual variance is 0.02, beta esti...
A: The regression analysis is a statistical procedure that allows us to find the linear association bet...
Q: An investor purchased a 91-day, $10,000.00 T-bill on its issue date for $9920.61. After holding it f...
A: A Treasury Bill (T-Bill) is a Treasury Department-backed one-year or less U.S. government debt oblig...
Q: In a regression of the single-index model, the R-square is 68%, residual variance is 0.08, beta esti...
A: R square = 68% = 0.68 residual variance (σe^2)= 0.08 Beta (B) = 0.7 Let σm^2 = Market variance
Q: The rise of securities markets and the expansion of intermediation by nonbanks has come partly at th...
A: A "security" is a fungible, negotiable financial instrument that has some type of monetary value. It...
Q: Problem 4. Lexberhomes Company sell 12,000 gallon of chili-flavored iced buko each month. Carying co...
A: Economic order quantity(EOQ) can be calculated by using this equation EOQ =2*A*OC where A=annual dem...
Q: Business Maths question f) A calculator is sold under hire purchase term. A deposit of 560/- is req...
A: Solution:- We know, Hire purchase price = Required Deposit (or Down Payment) + Total Amount paid thr...
Q: 1. Discount and Net price 1. The 3rd Album of Twice (Formula of Love: O + T= <3) it sells for 15,000...
A: Selling price (P) = 15000 Trade discount (d) = 10%
Q: eBook Brandtly Industries invests a large sum of money in R&D; as a result, it retains and reinvests...
A: The stock price which is the maximum price to be paid for share consists of dividends and terminal v...
Q: 10% A 62 15 Machine B First Cost 71 77 O&M Costs 10 12 35 Salvage Value 15 Useful Life (yrs) 4 Annua...
A: First cost = F Annual net savings = A = Benefits - Costs Salvage value = S Useful life = n i = 10%
Q: 3. Mando Inc. next year earnings per share is expected to be $7. Its return on equity is 20%, which ...
A: Given, Earnings per share is $7. Return of equity 20% Market required return is 12%
Q: Sims Manufacturing is expected to generate $195 million in free cash flow next year, and FCF is expe...
A: In this problem, First, we will compute the present value of free cash flows which will b the firm v...
Q: For the banking and finance industry what is the traditional role of data ? What type of data is sto...
A: Banking industry is defined as the foundation of the financial services group. It has the concern wi...
Q: QUESTION 1 a) A project requires the purchase of a new piece of machinery. choose between three pote...
A: Payback period is the period up to which the initial cost of the investment is recovered back. It is...
Q: As a result, the firm's days sales outstanding (DSO) is
A: Days Sales Outstanding: It shows the average number of days it takes for a firm to obtain payment f...
Q: Assume that the following asset values (in millions of dollars) exist in Iror Category Value (Millio...
A: Given information, Category Value (Million) Federal Reserve Notes in circulation $750.00 M...
Q: Statement I: Common shares are given preemptive rights so as not to dilute the percentage of ownersh...
A: Pre-emptive Rights are the rights which an existing shareholders have in a corporation which allows ...
Q: Rainbow Inc.'s sales equal $200,000 each month. Rainbow generally permits credit purchases with term...
A: A credit policy is an arrangement in which it is defined that how much credit will be given to the c...
Q: Which account should Scenario they use? Chris wants to put money aside so he can buy his mom a birth...
A: The main difference between a checking and a savings account is that a checking account is typicall...
Q: When Microsoft went public, the company sold 2 million new shares (the primary issue). In addition, ...
A: Since you have posted a question with multiple subparts, we will solve first three sub parts for you...
Q: town of Arrieta has decided to have an sculptor create a statue of their town founder, Arrieta Danie...
A: Present worth of all cost is considering the all cost and all maintenance cost and other all cost.
Q: Please define the “Interest Rate Parity Theorem” and explain the equation which describes it.
A: An interest rate parity theory is defined as an interest rate differential, which is between the two...
Q: Mr. Jones will invests P 5,000 in a fund at the end of each 6 months to accumulate P 100,000 to buy ...
A: Compounding of interest means, interest is received on principal as well as the earned interest amou...
Q: A company plans to borrow $10 million for 90 days, 180 days from today. The type of FRA and the posi...
A: A forward rate agreement between two parties where the interest on a notional principal is exchanged...
Q: The day Jared was born, his parents invest P20,000 at 5.5% m=4. Find the value of the fund on Jared'...
A:
Q: Moving to another question will save this response. Question 3 What is the yield to maturity of a 13...
A: Yield To Maturity: It refers to the expected rate of return for debt holders given that all coupon ...
round to the nearest cent
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Natsam Corporation has $291 million of excess cash. The firm has no debt and 526 million shares outstanding with a current market price of $16 per share. Natsam's board has decided to pay out this cash as a one-time divide a. What is the ex-dividend price of a share in a perfect capital market? b. If the board instead decided to use the cash do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete? c. In a perfect capital market, which policy in part (a) or (b) makes investors in the firm better off? C a. What is the ex-dividend price of a share in a perfect capital market? The ex-dividend price is $ on a per share basis. (Round to the nearest cent.) b. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete? The price of the shares once the repurchase is complete is $ per share. (Round to the nearest…Natsam Corporation has $250 million of excess cash. The firm has no debt and 600 million shares outstanding with a current market price of $17 per share. Natsam's board has decided to pay out this cash as a one-time dividend. What is the ex-dividend price of a share in a perfect capital market? (Round to the nearestcent.) If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market what is the price of the shares once the repurchase is complete? (Round to the nearestcent.) In a perfect capital market, which policy, in part (a) or (b), makes investors in the firm better off? (Round to the nearestcent.)Natsam Corporation has $293 million of excess cash. The firm has no debt and 453 million shares outstanding with a current market price of $13 per share. Natsam's board has decided to pay out this cash as a one-time dividend. a. What is the ex-dividend price of a share in a perfect capital market? b. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete? c. In a perfect capital market, which policy in part (a) or (b) makes investors in the firm better off? a. What is the ex-dividend price of a share in a perfect capital market? The ex-dividend price is $12.94 on a per share basis. (Round to the nearest cent.)
- LL corporation has $500M of excess cash. The firm has no debt and 1K shares outstanding with a current market price of $20 per share. LL’s board has decided to pay out this cash as a one time dividend. If the board instead decided to use the cash to do a one time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete?LL corporation has $500M of excess cash. The firm has no debt and 1K shares outstanding with a current market price of $20 per share. LL’s board has decided to pay out this cash as a one time dividend. What is the ex-dividend price of a share in a perfect capital market?Plato Corporation’s board announces to pay $2 million excess cash to shareholders. At the announcement, the firm has no debt and 1 million shares outstanding with the market value of equity of $12 million. Assume that the markets are perfect. (i) What is the cum-dividend price? (ii) If the firm distributes the excess cash as a cash dividend, what is the exdividend price? Is the drop in share price the same as the cash dividend per share? Why? (iii) If the firm distributes the excess cash as a share repurchase, what will its share price once the shares are repurchased? (iv) If you hold 1,000 shares and the firm distributes the excess cash as a share repurchase in part (iii). How do you use homemade dividend to receive a cash dividend as in part (ii)?
- Love Inc. believes that at its current share price of P16.00 the firm is undervalued. Makeover plans to repurchase 2.4 million of its 20 million shares outstanding. The Po Inc.’s managers expect that they can repurchase the entire 2.4 million shares at the expected equilibrium price after the repurchase. The Love Inc.’s current earnings are P44,000,000. If management’s assumptions hold, answer the following,1 .The current earnings per share is 2.What is the price to earnings ratio? 3.How much is the earnings per share after the repurchase? 4.What is the expected per-share market price after repurchase?AMC Corporation currently has an enterprise value of $390 million and $120 million in excess cash. The firm has 10 million shares outstanding and no debt. Suppose AMC uses its excess cash to repurchase shares. After the share repurchase, news will come out that will change AMC's enterprise value to either $590 million or $190 million. Suppose AMC management expects good news to come out. If management wants to maximize AMC's ultimate share price, will they undertake the repurchase before or after the news comes out? When would management undertake the repurchase if they expect bad news to come out? What effect would you expect an announcement of a share repurchase to have on the stock price? To maximize its share price, when will AMC prefer to repurchase shares? (Select the best choice below.) O A. After either good or bad news comes out. B. After good news and before bad news comes out. C. Before either good or bad news comes out. D. Before good news and after bad news comes out.…Covan, Inc. is expected to have the following free cash flow: a. Covan has 8 million shares outstanding, $2 million in excess cash, and it has no debt. If its cost of capital is 10%, what should be its stock price? Covan reinvests all its FCF and has no plans to add debt or change its cash holdings. If you plan to sell Covan at the beginning of year 2, what is its expected price? c. Assume you bought Covan stock at the beginning of year 1. What is your expected return from holding Covan stock until year 2? a. Covan has 8 million shares outstanding, $2 million in excess cash, and it has no debt. If its cost of capital is 10%, what should be its stock price? The current stock price should be $ (Round to the nearest cent.) Covan reinvests all its FCF and has no plans to add debt or change its cash holdings. If yqu plan to sell Covan at the beginning of year 2, what is its expected price? If you plan to sell Covan at the beginning of year 2, its price should be $ (Round to the nearest…
- Covan, Inc. is expected to have the following free cash flow: a. Covan has 7 million shares outstanding, $4 million in excess cash, and it has no debt. If its cost of capital is 12%, what should be its stock price? b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year 2, what is its expected price? c. Assume you bought Covan stock at the beginning of year 1. What is your expected return from holding Covan stock until year 2? a. Covan has 7 million shares outstanding, $4 million in excess cash, and it has no debt. If its cost of capital is 12%, what should be its stock price? The stock price should be $ (Round to the nearest cent.) b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year 2, what is its expected price? If you plan to sell Covan at the beginning of year 2, its price should be $ (Round to the nearest cent.) c. Assume you bought Covan stock at the beginning of…Hawar International is a shipping firm with a current share price of $4.94 and 9.8 million shares outstanding. Suppose that Hawar announces plans to lower its corporate taxes by borrowing $8.7 million and repurchasing shares, that Hawar pays a corporate tax rate of 25%, and that shareholders expect the change in debt to be permanent. a. If the only imperfection is corporate taxes, what will be the share price after this announcement? b. Suppose the only imperfections are corporate taxes and financial distress costs. If the share price rises to $4.99 after this announcement, what is the PV of financial distress costs Hawar will incur as the result of this new debt? a. If the only imperfection is corporate taxes, what will be the share price after this announcement? The share price after this announcement will be $ per share. (Round to the nearest cent.) b. Suppose the only imperfections are corporate taxes and financial distress costs. If the share price rises to $4.99 after this…Covan, Inc. is expected to have the following free cash flow: a. Covan has 8 million shares outstanding, $3 million in excess cash, and it has no debt. If its cost of capital is 11%, what should be its stock price? b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year 2, what is its expected price? c. Assume you bought Covan stock at the beginning of year 1. What is your expected return from holding Covan stock until year 2? a. Covan has 8 million shares outstanding, $3 million in excess cash, and it has no debt. If its cost of capital is 11%, what should be its stock price? The stock price should be $ (Round to the nearest cent.) A b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year 2, what is its expected price? If you plan to sell Covan at the beginning of year 2, its price should be $ (Round to the nearest cont.) c. Assume you bought Covan stock at the beginning of…