DFB, Inc. expects earnings next year of $4.29 per share, and it plans to pay a $2.78 dividend to shareholders (assume that is one year from now). DFB will retain $1.51 per share of its earnings to reinvest in new projects that have an expected return of 14.3% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 11.7%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $3.78 per share at the end of this year and retained only $0.51 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its dividend?
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- DFB, Inc. expects earnings next year of $4.41 per share, and it plans to pay a $2.02 dividend to shareholders (assume that is one year from now). DFB will retain $2.39 per share of its earnings to reinvest in new projects that have an expected return of 15.7% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 12.8%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $3.02 per share at the end of this year and retained only $1.39 per share in earnings. That is, it chose to pay a higher dividend instead of a. What growth rate of earnings would you forecast for DFB? DFB's growth rate of earnings is%. (Round to one decimal place.)DFB, Inc. expects earnings next year of $5.87 per share, and it plans to pay a $3.39 dividend to shareholders (assume that is one year from now). DFB will retain $2.48 per share of its earnings to reinvest in new projects that have an expected return of 15.5% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 11.9%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $4.39 per share at the end of this year and retained only $1.48 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…DFB, Inc. expects earnings next year of $4.73 per share, and it plans to pay a $3.09 dividend to shareholders (assume that is one year from now). DFB will retain $1.64 per share of its earnings to reinvest in new projects that have an expected return of 15.4% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 12.6%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $4.09 per share at the end of this year and retained only $0.64 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…
- DFB, Inc. expects earnings next year of $4.48 per share, and it plans to pay a $2.54 dividend to shareholders (assume that is one year from now). DFB will retain $1.94 per share of its earnings to reinvest in new projects that have an expected return of 15.7% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 11.8%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $3.54 per share at the end of this year and retained only $0.94 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesti in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…DFB, Inc. expects earnings next year of $5.99 per share, and it plans to pay a $4.36 dividend to shareholders (assume that is one year from now). DFB will retain $1.63 per share of its earnings to reinvest in new projects that have an expected return of 14.8% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 12.6%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $5.36 per share at the end of this year and retained only $0.63 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…DFB, Inc. expects earnings next year of $5.00 per share, and it plans to pay a $3.00 dividend to shareholders (assume that is one year from now). DFB will retain $2.00 per share of its earnings to reinvest in new projects that have an expected return of 15.0% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 12.0%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $4.00 per share at the end of this year and retained only $1.00 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…
- LTX Ltd expects earnings this year of $$5.275.27 per share, and it plans to pay a $$3.413.41 dividend to shareholders. LTX will retain $$1.861.86 per share of its earnings to reinvest in new projects which have an expected return of 16.516.5% per year. Suppose LTX will maintain the same dividend payout rate, retention rate and return on new investments in the future and will not change its number of outstanding shares. (a) LTX's growth rate of earnings is %(Round your answer to four decimal places) (b) If LTX's equity cost of capital is 12.912.9%, then LTX's share price will be $$(Round your answer to the nearest cent) (c) If LTX paid a dividend of $$4.134.13 per share this year and retained only $$1.141.14 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting its profits in as many new projects as it was going to under its original plan. If LTX maintains this new, higher payout rate in the future, then LTX's share price would be $$.(Round…DFB, Inc. expects earnings next year of $5.63 per share, and it plans to pay a $4.11 dividend to shareholders (assume that is one year from now). DFB will retain $1.52 per share of its earnings to reinvest in new projects that have an expected return of 14.8% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 12.5%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $5.11 per share at the end of this year and retained only $0.52 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…Rearden Metals expects to have earnings this coming year of $2.50 per share. Rearden plans to retain all of its earnings for the next year. For the subsequent three years, the firm will retain 50% of its earnings. It will then retain 25% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 25% per year. Any earnings that are not retained will be paid out as dividends. Assume Rearden's shares outstanding remains constant and all earnings growth comes from the investment of retained earnings. If Rearden's equity cost of capital is 8%, then what is Rearden's stock price?
- California Fishing Company (CFC) is expected to pay a dividend next year of $50 per share. Future Dividends for CFC are expected to grow at a rate of 5% per year indefinitely. If an investor is currently willing to pay $500 each CFC share, what is the investor’s required return for this investment?Golf Ball Inc. expects earnings to be $10,000 per year in perpetuity if it pays out all of its earnings in dividends. Suppose the firm has an opportunity to invest $1,000 of next year's earnings to upgrade its machinery. It is expected that this upgrade will increase earnings in all future years (starting two years from now) by $140. Assume that Golf Ball's next dividend is one year from now. The required rate of return is 12%. What is the value of Golf Ball Inc. if it undertakes the upgrade?Dreamline expects to earn $20 per share this year and intends to pay out $8 in dividends to shareholders. It is planning to invest in new projects with an expected return on equity of 20%. The future plans of Dreamline involve retaining the same dividend payout ratio. Dreamline expects to earn 20% on its equity .The number of common shares outstanding will remain unchanged. i) Calculate the future growth rate for Dreamline’s earnings. ii) If the required rate of return of for Dreamline’s common stock is 15%, what would be the price of Dreamline’s common stock? iii) Compare the valuation of bonds and preferred stock with that of common stock