6. Assume that company Otto currently pays out a dividend of £8 per share and dividends are expected to grow at a rate of 5% per year. The cost of equity for company Otto is 10%. What is the share price of company Otto? O O 5 6 12 ܩ 16 8 21 0
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- The Cost of Equity and Flotation Costs Messman Manufacturing will issue common stock to the public for $30. The expected dividend and the growth in dividends are $3.00 per share and 5%, respectively. If the flotation cost is 10% of the issue’s gross proceeds, what is the cost of external equity, re?Assume that a company’s shares has intrinsic value P125 per share and is trading at P130. This company requires an 6% minimum rate of return and will pay a dividend per share next year which is expected to increase by 4% annually. a. How much the company will pay for dividend per share? b. What is the status of the shares in the market?6. Matilda Industries pays a dividend of £2.10 per share and is expected to pay this amount indefinitely. If Matilda's cost of equity capital is 9%, which of the following would be closest to Matilda's share price? A. £14.00 B. £18.66 C. £23.33 D. £29.16
- 10. Consider the following price and dividend data for Quicksilver Inc.: Year Price (£) Dividend (£) 0 10 1 0.14 2 0.14 3 14 0.14 Assume that you purchased Quicksilver's share in year 0 and sold it at the end of year 3. Your annual rate of return for holding this share is closest to ________. A. 8% B. 14% C. 20% D. 19%Topstone Industries just paid an annual dividend of $2.00 per share this year. This dividend, along with the firm's earnings, is expected to grow at a rate of 5% per annum forever. If the current market price for a share of Topstone is $38.61, what is the implied cost of equity?O A. 5.36% B. 10.18% . 11.22% D. 10.44 % 0 E 10.71%1. Company Yoyo currently pays out a dividend of £2 per share. It reinvests 1/3 of earnings in capital projects (plough-back ratio b). These capital projects are expected to return 15% per year (ROI). The cost of equity for company Yoyo is 10%. What is the share price of company Yoyo? 2 1 O 23 O 42 10 5
- Topstone Industries just paid an annual dividend of $2.00 per share this year. This dividend, along with the firm's earnings, is expected to grow at a rate of 5% per annum forever. If the current market price for a share of Topstone is $38.61, what is the implied cost of equity? O A. O B. 10.44% O D. 11.22% O C. 10.71% 10.18% OE. 5.36% 7Company X just paid (year 0) a dividend of $1.20. If you expect Company X's dividends to grow at 7% per year forever, what is the current price of Company X's share if its equity cost of capital is 11%? O $6.67 O $11.67 O $30.00 O $32.10Credenza Industries is expected to pay a dividend of $1.50 at the end of the coming year. It is expected to sell for $61 at the end of the year. If its equity cost of capital is 9%, what is the expected capital gain from the sale of this stock at the end of the coming year? .... O A. $57.34 O B. $5.04 OC. $55.96 O D. $3.66 ..
- NoGrowth Industries presently pays an annual dividend of $1.00 per share and it is expected that these dividend payments will continue indefinitely. If NoGrowth's equity cost of capital is 10%, then the value of a share of NoGrowth's stock is closest to: ..... O A. $10.00 В. $11.00 С. $8.00 D. $12.00Assume that a company’s shares have an intrinsic value of P125 per share and are trading at P130. This company requires a 6% minimum rate of return and will pay a dividend per share next year which is expected to increase by 4% annually. How much the company will pay for dividends per share? What is the status of the shares in the market?Company R has paid most recent dividend as $2.55. The dividend will be paid by the company forever and the dividend will grow at 6.00% forever. The required rate of return is 10%. What will be the current stock price? a. $63.750 b. $67.575 c. $65.125 d. $67.255